CoreWeave's shares tumbled this week as its bond yields climbed toward 15%, a sign that investors are increasingly worried about the company's debt-financed expansion of AI data centers. The yield move reflects broader concern about whether CoreWeave can manage its interest payments as it continues to borrow heavily.
Freedom Capital Markets' Paul Meeks said CoreWeave's balance sheet is relatively weak compared with its neocloud peers, largely because the company has taken on more debt and is still building out additional data centers. However, he does not share the market's alarm, describing the situation as not deteriorating, though he acknowledged it may not be improving until the new facilities become operational.
Meeks expects CoreWeave to report flat margins for the June-to-September period, followed by a significant improvement between September and December once the data centers are up and running. The company's next quarterly results are scheduled for November.