CoreWeave bonds have fallen to levels that would typically be classified as distressed under conventional standards, raising concerns over the company’s massive borrowing structure used to expand artificial intelligence infrastructure.

On Oct. 19, IT outlet The Verge reported that CoreWeave shares fell more than 20 percent from last Tuesday’s closing level, and anxiety spread to other AI-related stocks and the corporate bond market.

Investors are worried not only about the current level of debt but also the possibility of additional borrowing. Brannin McBee (브래닌 맥비), a CoreWeave co-founder, said in an interview with the Financial Times last week that he wants to lift the company’s credit rating to investment grade from speculative grade to raise funds from insurers. He described insurers’ capital as "unlimited." That has added to concerns that CoreWeave, already carrying huge debt, could seek more borrowing.

CoreWeave is known in the AI industry as a high-debt company. As of its second-quarter results, debt exceeded $35 billion. It pioneered lending backed by graphics processing units and focuses its business on selling computing resources. It is not yet profitable and posted a net loss of more than $1 billion in the first half of this year alone. If borrowing costs rise as well, it will be even harder to secure profitability.

John Jovanovic, co-head of leveraged finance at MetLife Investment Management, said in an interview with Bloomberg, "The issue is not that credit has changed over the past year, but that supply increases further over the next year and a half." He meant that as supply of AI computing infrastructure expands, doubts are growing over whether demand and profitability can support it.

Even so, it is too early to conclude that CoreWeave is in crisis. As of the second quarter, the company secured remaining performance obligations of $103.7 billion from contracts signed with customers. About 40 percent of that is due to be paid in 2028, and counterparties cannot cancel the contracts except for limited exceptions. Key customers are estimated to be Microsoft, OpenAI and a third customer believed to be Nvidia. These three accounted for about three-quarters of second-quarter revenue. CoreWeave did not disclose the third customer’s name.

Microsoft and Nvidia are viewed as customers with relatively clear ability to pay. OpenAI’s financial situation is uncertain, but unless it is in far worse financial trouble than is known, CoreWeave appears likely to be able to keep the business running for the time being. If it can continue to repay debt, it can keep operating, but whether its current business model is sustainable after the AI investment boom cools will only be confirmed then.

Unease around CoreWeave is spreading to other companies. Oracle shares fell about 10 percent over the same period, and its corporate bonds also faced selling pressure. Similar concerns exist across neocloud companies that secure servers and GPUs through large-scale borrowing and then sell computing resources. Still, the share drop alone does not allow a conclusion that the AI bubble is collapsing. Some investors instead see the decline as a buying opportunity. Ultimately, the key question is whether CoreWeave can turn large customer contracts into actual profit and shoulder its heavy debt burden.