CoreWeave bond yields top 15% as AI stock and debt selloff deepens

Bonds and shares slide

CoreWeave's bonds had their second straight day of selling on Wednesday, 14 October, lifting their yields above 15% (Axios). Yields rise as prices fall, so the move meant buyers were demanding far more to hold the company's debt. The stock fell roughly 15.5%, its worst drop since February, according to Axios, while Les Echos put the Nasdaq loss at 15.46% and Parkiet reported a 16% fall. Bloomberg reported the same day that the company's unsecured debt due in 2032 was trading below 80 cents on the dollar.

Wider AI-linked selloff

The SOX semiconductor index fell for a sixth straight session on Wednesday and is down 7.5% this month, Axios reported. The outlet also pointed to a run of IPO delays, including that of Firmus, an Australian data center operator backed by Nvidia, as a sign that investors are uneasy about some AI-related valuations. Luis Alvarado of Wells Fargo Investment Institute told Parkiet that investors increasingly want compensation for risk. In his view, the period of easy access to money that lasted through the first nine months of the year is coming to an end. John Atkins, who covers corporate bonds at PitchBook, told Axios how he read the sell-off:

CoreWeave is a bellwether for the riskier cusp of hyperscaler sentiment.

Rates and the inflation print

Early on Wednesday, a hotter-than-expected Consumer Price Index for September sent Treasury yields sharply higher, with the US 10-year briefly jumping above 5.30%, Axios reported. The outlet noted that corporate bonds can benefit when government yields rise on strong growth, but that sharp moves in government yields often set off sympathy sell-offs in corporate debt, according to analysts. Axios said the proximate cause of the selling was hard to pinpoint, though rising rates may have played a part. Parkiet put the yield to maturity at 14.8% on CoreWeave's 9.625% coupon notes due 2032 and at about 14.9% on its 9.75% notes due 2031.

Musk and the credit bubble debate

Elon Musk responded to a chart showing CoreWeave's bond yields climbing toward 15% with a one-word post, which Bloomberg reported as "Yikes". Venture capital investor Chamath Palihapitiya shared the chart and warned of a possible private credit bubble forming around the AI industry. His analysis projects capital spending by Alphabet, Amazon, Meta, Microsoft, Oracle and Space Exploration Technologies rising from $470bn in 2025 to more than $1.3tn by 2027. His charts show direct lending to US borrowers growing from $96bn in 2010 to about $2.4tn in 2025, with technology companies accounting for $1.05tn, or 44%, of the direct lending market in 2025. He also cited unpaid loans to software (SaaS) firms exceeding $500bn.

CoreWeave's response

CoreWeave Chief Executive Michael Intrator blamed the slump on the market and told staff in an internal memo on Wednesday that he was confident in the company's business model.

When you are building a new type of technology company, there will be periods of time when the market misunderstands and acts irrationally.

According to Bloomberg Business, the company's deal backlog is large enough to more than support its debt obligations. Axios wrote that the episode seems to have rattled investors about the AI boom, even though markets often overshoot.