The author argues that last week's sell-off, especially Friday's, does not mean the data center and AI 'super-cycle' is over. He suggests the selling may instead reflect unwinding positions and the collapse of a hedge fund that borrowed billions from a firm that has not yet disclosed its losses. He notes that semiconductors fell nine straight days and CoreWeave's corporate bond yields spiked, arguing the bond market is squeezing debt-funded buyers. He defends Nvidia and CEO Jensen Huang, saying Nvidia's funding of AI companies differs from the circa-2000 'vendor finance' that benefited vendors whose customers did not need their products. He believes AI demand is real, citing OpenAI, Anthropic and Google's Gemini, which have monetized AI at scale.
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CoreWeave (CRWV) sparked worries across the neocloud sector after yields on some of its bonds reached 15%, making it more expensive to borrow for future AI infrastructure. The author argues this is mainly a CoreWeave-specific issue, since the company leases its data centers rather than owning land and power like Nebius (NBIS) and Iren (IREN). CoreWeave's second-quarter revenue more than doubled to $2.58 billion, but it held $5.5 billion in cash against $20.9 billion in total current liabilities, a current ratio of just 0.46, and paid $640 million in interest in the quarter. By comparison, Nebius and Iren posted current ratios of 3.08 and 3.55 and have access to lower-rate financing options. The article concludes that CoreWeave faces greater financial pressure, while Nebius and Iren are better positioned in the sector.
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