Shares of neocloud AI infrastructure companies CoreWeave, Nebius and IREN fell again after a hot September CPI report, with prices up 0.6% and annual inflation at 3.7%, which lifted Treasury yields and raised expectations of a possible Fed rate hike. Over the past month, CoreWeave dropped 35.25%, Nebius 29.46% and IREN 45.92%. CoreWeave's bonds due 2032, sold at a 9.625% yield, now reportedly yield about 15%, and its credit default swaps topped 1,000 bps, while its second-quarter interest expense of $640 million far exceeded $128 million of adjusted operating income. Gartner also forecast that up to 80% of neoclouds could stop operating independently by 2030. The article argues that higher borrowing costs erode returns on debt-funded GPU buildouts, which is a concern given Nebius plans $20 to $25 billion and IREN $25 to $30 billion of capital spending.
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CoreWeave (CRWV) shares closely track sentiment around AI stocks, since the company rents out compute capacity and gives customers access to Nvidia's AI chips. Last week the stock fell below $60, hitting a 52-week low of $59.51, and was down 26% over the past month. Concerns that the war in Iran may not end soon and that inflation could keep interest rates high have weighed on the stock. With high debt and no profitability, the company reported a net loss of $626 million in its last earnings report in August, largely due to $640 million in interest costs. The author argues that the lower valuation does not offset the risks, which depend heavily on AI demand and interest rates.
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CoreWeave (CRWV) shares fell below $60 last week, hitting a new 52-week low of $59.51, and were down 26% over the past month. The article links the selloff to concerns that the war in Iran will not end soon, that inflation may stay elevated and push interest rates higher. The company carries a heavy debt load and is unprofitable; at its last August earnings report it posted a net loss of $626 million, largely due to $640 million in interest costs. The author says the stock remains risky even at its lower valuation, since its outlook depends heavily on AI demand and interest rates.
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