October 16 – CoreWeave’s (CRWV.O), opens new tab mounting debt is raising fresh concerns about the AI boom, as investors question whether demand can justify the billions being borrowed to build data centres.
Shares and bonds of the Nvidia-backed (NVDA.O), opens new tab company have tumbled despite its CEO’s assurances of a strong contract backlog, fueling a broader selloff in technology stocks.
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Here is why investors are worried and what its troubles could mean for the industry.
WHAT DOES COREWEAVE DO?
CoreWeave rents out computing power from Nvidia processors to companies developing and running AI, including Microsoft (MSFT.O), opens new tab and OpenAI.
It is one of the leading “neocloud” providers, a group of newer cloud companies that are growing rapidly to meet demand for scarce and expensive AI chips.
These neocloud companies give customers access to computing power without requiring them to build their own data centers. However, supplying such capacity requires heavy upfront investment in chips and infrastructure, often financed with debt.
CoreWeave (NASDAQ:CRWV) and other neocloud stocks fell in after-hours trading Wednesday after Microsoft (NASDAQ:MSFT) reported lower-than-expected capital spending, raising fresh concerns about the pace of AI infrastructure deployment.
Retired, living in the Scottish Borders after living most of my life in cities in England. I can now indulge my interest in all aspects of living close to nature in a wild landscape. I live on what was once the Iapetus Ocean which took millions of years to travel from the Southern Hemisphere to here in the Northern Hemisphere. That set me thinking and questioning and seeking answers.
In 1998 I co-wrote Millennium Countdown (US)/ A Business Guide to the Year 2000 (UK) see https://www.abebooks.co.uk/products/isbn/9780749427917
