CoreWeave Stock Wipeout Exposes Divide Between AI Fear and Greed

(Bloomberg) -- CoreWeave Inc. has become ground zero in a tug of war between investors who see rising bond yields as a potential rally killer for the AI trade and those who think demand for computing power will make those concerns seem passe before long.

The cloud-computing services provider's shares plunged 20% in the first three sessions of the week, including more than 15% on Wednesday, as its debt tumbled to levels that typically indicate distress. On Thursday morning, the cost of protecting CoreWeave bonds against default rose to the highest intraday level on record, while swaps priced in a more than 60% chance of a default within the next five years.

But by Thursday afternoon, the sense of panic appeared to be alleviating as the stock bounced into the green with Jensen Huang, chief executive of Nvidia Corp., which is a CoreWeave shareholder and supplier, expressing confidence in the company. In addition, Deutsche Bank called the selloff a "buying opportunity." The shares ended the day up 5.9%, their best performance in over a month, though they gave up some of that recovery in Friday's premarket trading.

"The macro backdrop has created a sell-first, ask-questions-later market," said Thomas DiFazio, exchange-traded fund strategist at Roundhill Financial. "In the short run, it is hard to say with a straight face that the all-clear is here."

As a so-called neocloud provider, Coreweave is at the heart of the infrastructure buildout needed to develop artificial intelligence technology. The safety of its debt is a key issue for investors because its spending on building data centers is being funded by issuing bonds. With Treasury yields climbing and inflation remaining stubbornly high, the cost of that financing is rising fast.

All of which has led to a bumpy ride for CoreWeave shares. The stock is up 74% since its troubled initial public offering in March 2025 that had to be backstopped by Nvidia. But it's down 2.7% this year and 62% since hitting a peak in June 2025, and it's less than $30 from its debut price.

However, the upside for CoreWeave is pretty obvious, as demand for AI computing services continues to outstrip supply. And there are few signs that dynamic is going to change any time soon, DiFazio said.