CoreWeave’s $35 billion debt puts AI companies in the spotlight

CoreWeave’s borrowing has drawn investor attention to the debt behind the artificial intelligence buildout. The company’s bonds entered distressed territory under a common definition: investors demand 1,000 basis points more yield than they would receive from government bonds. Its shares fell more than 20 percent after Tuesday’s close.

At its second-quarter earnings, CoreWeave reported more than $35 billion in debt and a loss of more than $1 billion in the first half of the year. The company sells computing capacity and has used GPUs as collateral for loans. Cofounder Brannin McBee told the Financial Times that CoreWeave wants investment-grade debt so it can borrow from insurers.

CoreWeave also reported $103.7 billion in remaining performance obligations from customers as of the second quarter. About 40 percent is due in 2028, and the contracts can be canceled only in limited circumstances. Microsoft, OpenAI and probably Nvidia together generated almost three-quarters of second-quarter revenue; CoreWeave does not identify its third-largest customer.

The concerns have also affected other AI-related companies. Oracle shares fell almost 10 percent over the same period, and its bonds saw a sell-off. The source argues that CoreWeave’s stock decline alone does not establish that the AI boom is ending, while noting that higher borrowing costs could make profitability harder to reach.