Shares of CoreWeave (CRWV) plunged 12% on October 16, putting the AI infrastructure company on track to end the week down 25% as concerns over AI funding continued to weigh on market sentiment. Earlier this week, Bloomberg reported a sharp rise in CoreWeave’s bond yields, raising questions about whether the company can generate enough cash flow to support its rapid expansion. CoreWeave’s bond yields rose to around 15%, while the cost of insuring its five-year debt against default rose as much as 74.5 basis points to 1,194.5 basis points, an all-time intraday high, according to Bloomberg. That could mean odds of more than 60% that CoreWeave will default sometime in the next five years. CoreWeave has been spending heavily on data centers and Nvidia (NVDA) chips to meet the growing demand for AI computing power. The company has landed major contracts with AI developers and technology companies, but building the infrastructure necessary to deliver on those deals requires a substantial upfront investment. Nvidia CEO Jensen Huang Defends CoreWeave The drop on Friday, Oct. 16 came after CoreWeave stock rallied the day before, following comments from Nvidia CEO Jensen Huang that helped ease some concerns. “CoreWeave’s strength is improving every day,” Huang said at a Bloomberg event in Stockholm. “I’m optimistic. In fact, their cost of capital is decreasing.” Nvidia owns approximately 47.2 million shares of CoreWeave, representing about 10% of the company. CoreWeave is also a major customer of Nvidia chips. However, Huang’s calmness failed to sustain the rebound. Peer Nebius (NBIS), another company that invested heavily in AI computing infrastructure, fell about 12% on October 16 and was also on track for weekly losses. Nvidia also invests in Nebius. Also Read: Dell Stock Price Drops 6.8% After Epic 271% Rise In August, CoreWeave reported second-quarter results that surpassed Wall Street expectations. The company posted an adjusted loss of $1.03 per share, narrower than the $1.20 loss analysts had expected. Revenue amounted to $2.58 billion, up 112% from the previous year and above the $2.56 billion estimated by Wall Street. For the third quarter, CoreWeave expected revenue of between $3.4 billion and $3.6 billion, implying 158% growth at the midpoint. Analysts surveyed expected $3.43 billion, CNBC reported. CoreWeave also reported a revenue buildup of over $100 billion. That means you haven’t earned that money yet. CoreWeave shares are down 15% so far this year. A Getty Images analyst recommends buying CoreWeave stock on a dip. Despite the recent sell-off, Cantor Fitzgerald analyst Brett Knoblauch believes investors are focusing too much on CoreWeave’s debt and overlooking its improving business fundamentals. In a research note, Knoblauch said the rise in CoreWeave’s debt yield reflects concerns about funding massive capital expenditures on AI rather than weakening demand, according to StockTwits, citing The Fly. Also Read: Micron Stock Falls Even as Analysts Consider Semiconductor Sell-Off. Knoblauch said demand remains strong, with nearly all of CoreWeave’s 2027 capacity already sold and Nvidia providing a backup for unsold capacity. He also pointed to improving economics, including rising revenue per megawatt and contribution margins, which have shortened the payback period for AI chips to 2-2.5 years. Knoblauch believes that improving unit economics and asset-backed financing can help CoreWeave sustain its rapid growth, despite concerns about borrowing costs. Cantor Fitzgerald maintained his Overweight rating and $176 price target on CoreWeave shares, recommending that investors buy the dip. CoreWeave shares are trading at around $61 at the time of writing. Related: Cathie Wood Sells $15.8 Million Worth of Popular Semiconductor Stock. This story was originally published by TheStreet on October 16, 2026, where it first appeared in the Investments section. Add TheStreet as a preferred source by clicking here.
