- CoreWeave faces rising debt, falling shares, and higher borrowing costs amid AI sector pressure
- Company holds $50 billion debt and plans $35-$39 billion capital spending for data center expansion
- CoreWeave expected to report $13 billion revenue in 2026 with a loss of $2.13 billion and bond yields near 16%
The growing financial strain at CoreWeave is putting fresh pressure on investor confidence in the artificial intelligence (AI) sector.
The Nvidia-backed cloud computing company is facing scrutiny over its mounting debt, falling shares and rising borrowing costs. The selloff is also adding to valuation concerns surrounding AI leaders Anthropic and OpenAI.
CoreWeave had around $50 billion in debt, according to data compiled by LSEG and cited by Reuters.
The company has increased its annual capital spending forecast to between $35 billion and $39 billion as it expands its data centre capacity to meet growing demand for AI computing.
However, its aggressive investment strategy is raising questions about how quickly these projects can generate returns.
Analysts expect CoreWeave to report nearly $13 billion in revenue in 2026, alongside a loss of approximately $2.13 billion. Yields on some of its bonds have climbed towards 16%, signalling rising concerns among creditors.
CoreWeave shares have also faced a sharp selloff. The stock had fallen more than 22% over the week ending October 16, highlighting the market's growing sensitivity to debt-heavy AI businesses.
Also Read | Wall Street Movers: Tesla, SpaceX, Alcoa, CoreWeave Among Stocks Buzzing In Premarket Trade
Anthropic's Valuation Expectations Take a Hit
The pressure is extending beyond infrastructure providers to companies developing AI models. Investors have reportedly lowered their valuation expectations for Anthropic ahead of its planned initial public offering (IPO).
According to Reuters, some investors have discussed a valuation of around $1.5 trillion, down from previous expectations of approximately $2 trillion.
The reassessment followed disclosures that Anthropic's third-quarter revenue rose 45% to $16.8 billion. Although the company reported adjusted profitability for the quarter, investors expressed disappointment over the slower pace of revenue growth.
This shift suggests that strong sales alone may not justify the valuations previously anticipated for leading AI companies.
Also Read | CoreWeave Picks Navi Mumbai For India Entry, Partners With AdaniConneX For 240 MW Data Centres
OpenAI Faces Greater Scrutiny
OpenAI is also facing questions over its growth trajectory. Its September annualised revenue was reported at nearly $50 billion, below the roughly $70 billion figure indicated earlier. Reuters noted that differences in accounting for revenue generated through cloud partners contributed to the discrepancy.
Together, these developments are encouraging investors to scrutinise AI valuations more closely. The key concern is whether revenue growth can support the enormous costs of computing infrastructure, chips and model development.
CoreWeave's troubles do not automatically mean Anthropic or OpenAI will suffer similar financial problems.
However, rising financing costs and greater demands for profitable growth could make investors less willing to accept ambitious valuations without stronger evidence of sustainable returns.
Essential Business Intelligence, Sharp Market Insights, Practical Personal Finance Advice, Daily Fuel, Gold and Silver Prices and Latest Stories — On NDTV Profit.