CoreWeave Stock Plunges as Bond Yields Hit 15%
Credit markets price in distress risk as the neocloud provider leans on $103.7 billion in backlogged contracts to service $52 billion in debt.
CoreWeave’s stock cratered more than 20% across regular and extended trading Wednesday after the artificial intelligence infrastructure provider’s bond yields spiked to 15%, a threshold that signals deep anxiety among credit investors about the company’s ability to service its massive liabilities.
The selloff accelerated after venture capitalist Chamath Palihapitiya circulated a chart on X tracking the yield surge, questioning whether the broader AI hardware buildout is inflating a private credit bubble. The market reaction coincided with CoreWeave co-founder Brannin McBee publicly pitching insurance companies as his next source of capital, describing the sector’s reserves as “all the money in the world.”
Bond yields rising to 15% push a company firmly into distressed-debt territory. In standard corporate finance, yields at this level indicate that lenders view the probability of default or restructuring as materially elevated, demanding a steep premium to hold the paper. For context, Deutsche Bank data shows that investment-grade AI-linked borrowers such as Meta, Alphabet, Amazon, and Nvidia secure front-end financing at roughly 5% to 5.5%. Even BBB-rated entities like Oracle and SpaceX cluster around 8% to 8.5% at 10- to 12-year durations. CoreWeave, carrying a BB+ rating, now sits far outside that distribution curve.
The fundamental arithmetic driving Wall Street’s unease is stark. CoreWeave reported $35.6 billion in total debt and $16.3 billion in operating lease liabilities during its second-quarter earnings release. Against that combined $52 billion burden, the company generated $4.6 billion in quarterly revenue while posting a $1.4 billion net loss because operating expenses continued to exceed sales.
To bridge the gap between current cash burn and long-term obligations, CoreWeave relies entirely on remaining performance obligations (RPOs). The company disclosed $103.7 billion in RPOs, with 41% scheduled for payout through 2028. Under accounting rules, RPOs represent noncancellable agreements for future services. In the neocloud sector, these function as take-or-pay contracts, legally binding customers to remit payment regardless of whether they ultimately utilize the provisioned compute capacity.
Evan Schlossman, principal at Neostellar Capital Corp., which purchased a $25 million stake in CoreWeave in 2024 and sold 40% of it for a $15 million gain in the second quarter of 2025, argues the balance sheet is sound. He maintains that lenders are effectively underwritten by tier-one corporate clients. Microsoft and OpenAI account for the bulk of CoreWeave’s business, with its top three customers generating 72% of second-quarter revenue.
“98% of our revenue is from committed, take-or-pay contracts,” CoreWeave said in a statement. “We structure the majority of our financing so that cash flows from customer contracts repay the associated debt and generate additional free cash flow.”
Schlossman contends that even if OpenAI faced insolvency, the underlying compute capacity contracted to the startup has appreciated in value since signing, allowing CoreWeave to resell the infrastructure at a premium. He cautioned, however, that smaller neocloud providers backed by early-stage venture capital lack this buffer, making counterparty risk the defining variable for survival across the industry.
Not all analysts accept the premise that enterprise contracts guarantee repayment. Francine McKenna, an accountant and investigative journalist who teaches at The Wharton School and Cambridge, argues that hyperscalers routinely exploit leverage when demand softens.
“If CoreWeave is counting on Microsoft to honor its contracts and bail them out of extreme debt and losses I have a bridge in Brooklyn I’d like to sell them,” McKenna said. “Microsoft is ruthless and will eat CoreWeave for lunch and throw bones to its dogs if it makes sense for them.”
McKenna’s skepticism reflects a broader structural vulnerability emerging in data center finance. Take-or-pay contracts face their stiffest test when physical infrastructure falls behind schedule. Oracle recently issued a force majeure citation to Blue Owl, the developer of a major New Mexico data center, over concerns the facility would miss its 2028 completion target. That maneuver demonstrated that enterprise clients retain legal mechanisms to exit commitments if external conditions shift, undermining the assumption that RPOs are absolute guarantees.
Gartner currently projects that 80% of independent neocloud providers will cease operations by 2030 because revenues will fail to cover capital expenditures. A 2025 Fortune analysis previously identified CoreWeave’s specific financial architecture as a potential catalyst for a wider AI credit contraction.
CoreWeave shares closed down 15.46% on Wednesday before shedding another 5.62% in aftermarket trading.
