CoreWeave confronts 'doom cycle' narrative as neocloud credit risk overshadows growth

Skip Navigation Markets Business Investing Tech Politics & Policy Video Watchlist Investing Club PRO Livestream Menu Key Points Leading neoclouds CoreWeave and Nebius have both lost about half their value in the past month as they get set for earnings reports this week. Yields on some CoreWeave bonds are trading above 16%. Last week's midterm elections, which produced sweeping victories for Democrats, added to uncertainty about the pace of the AI buildout. In this article CRWV Follow your favorite stocks CREATE FREE ACCOUNT CoreWeave CEO Michael Intrator is interviewed on CNBC's Squawk on the Street at the New York Stock Exchange in New York on Feb. 27, 2026. Michael M. Santiago | Getty Images After a tumultuous month for neoclouds that saw stock prices cut in half, investors are eager to hear how the leading companies in the space plan to navigate a tightening credit market and an unfavorable political environment. CoreWeave is set to report quarterly results on Tuesday, followed by Nebius on Thursday. Both companies are reliant on debt to fund their purchases of cutting-edge artificial intelligence systems, but they're confronting a skeptical base of lenders as the AI trade sours on Wall Street. The neoclouds had a particularly rough day last Thursday, suffering dramatic drops and contributing to the Nasdaq's steepest slump in 19 months. Leading chipmakers Nvidia , Advanced Micro Devices and Micron also plummeted on concern that raging anti-AI sentiment would further complicate buildout plans. Nvidia, a major investor in a number of neoclouds, including CoreWeave and Nebius, faces its own fresh turbulence after CEO Jensen Huang admitted Sunday that he'd had an extramarital affair with a business executive who intelligence agencies say is a Chinese spy. That news could add further volatility to an already nervous market. Stock Chart Icon Stock chart icon CoreWeave vs. Nebius over past month Democrats last week won governors' races in Georgia, Iowa, Nevada, Ohio and Texas, and voters rejected data centers in all but one of the 41 related measures on ballots across the country. CoreWeave CEO Mike Intrator took to LinkedIn to try to temper investors' fears. "We currently don't anticipate any impact to CoreWeave's existing customer commitments or associated backlog as a result of shifts in the political landscape," Intrator wrote. But the market was unrelenting. Yields on some CoreWeave bonds maturing in 2031 jumped above 16%. The spread on its five-year credit default swaps, which are insurance against default, soared above 1,240 basis points, up 50% in the past month. "I do agree completely that neoclouds in particular are going to be the most impacted," Anastasia Amoroso, chief investment strategist at Partners Group, told CNBC's "Closing Bell" on Friday. Unlike hyperscalers Amazon and Microsoft , the top neoclouds are unprofitable and heavily dependent on a small number of customers. IREN , a smaller publicly traded neocloud, said in its earnings report late Thursday that about 48% of its backlog was tied to Microsoft. But the company provided some relief to the market after reporting that AI cloud revenue more than doubled from the prior period. IREN's stock jumped 20% on Friday, recouping its losses from Thursday. Daniel Roberts, co-CEO of IREN, told CNBC that there's a "disconnect between what we're seeing in public market and what we're seeing at the customer level," but he acknowledged the challenge posed by financial markets. "Capital markets have become more selective in the last few weeks, and the questions have undoubtedly moved from how big the contract is to whether it can be delivered, financed, and run at a profit," Roberts said on the earnings call. His company currently has $10 billion in debt. 'How to close this financing gap' At the end of June, CoreWeave was sitting on $5.5 billion in cash and $35 billion in debt. The company owed $1.3 billion at a 15% interest rate on a facility that comes due in March 2028, and had $3.2 billion in obligations on an August 2030 facility at an 11% rate, according to the latest earnings statement . CoreWeave is unlikely to go bankrupt in the near future, and it has the funds to deliver on existing contracts, but growth over the next five years will require more capital, said Luke Yang, a Morningstar analyst covering CoreWeave. "If they want to issue money through equities, the stock price is not working in their favor, because the stock has been beaten down," Yang said. "So I also want to see how management talks about how to close this financing gap." Yang said he's also paying attention to the broader neocloud market. Nscale, based in the U.K., filed paperwork for an IPO in September but hasn't published an updated prospectus since then. "I wouldn't say it's a good time for them to go public," Yang said. SB Energy, which filed at the beginning of September, is in a similar predicament, and Australian neocloud Firmus nixed plans for an IPO last month. watch now VIDEO 4:13 04:13 Freedom Capital's Paul Meeks: CoreWeave shares may triple Power Lunch The uncertainty has not helped CoreWeave's case, Intrator told employees in an October memo seen by CNBC. "But these companies are trying to raise enormous amounts of capital without the execution, revenue, scale or software solutions that CoreWeave delivers to its customers," he wrote. Investors are still on watch. Paul Meeks, head of technology research at Freedom Capital Markets, told CNBC's "Power Lunch" on Thursday that the narrative is "just so negative." "Unfortunately, it's a self-fulfilling prophecy, a doom cycle, where if the creditors are worried about CoreWeave paying back their debts, then of course they have to borrow going forward to fund their AI infrastructure build at exorbitant rates," he said. CoreWeave generated $5 billion in revenue in 2025. Meeks estimates that number jumping to $42 billion in 2028, with an EBITDA (earnings before interest, taxes, depreciation and amortization) margin that year of close to 70%. "If they can get on that path and folks feel comfortable with that path, then they'll feel more comfortable about the debts and CoreWeave's financial wherewithal to pay those debts." For the most recent quarter, analysts expect revenue growth of about 160% from a year earlier to $3.55 billion, according to LSEG. Nebius is expected to report sixfold growth to about $908 million. Meeks said he expects the market to get "some relief" from both earnings reports. CoreWeave declined to comment. Nebius didn't respond to a request for comment. For Meeks, the key is getting capital markets back on board with the neoclouds' growth story, and believing that profits are on the way. "You can have a healthy bank, but if there's a run on banks generally speaking then they could be in some trouble," he said. "So I am not fool enough to downplay the credit risk." WATCH: Partners Group's Amoroso: The markets are questioning if the data center trade will continue watch now VIDEO 4:12 04:12 Partners Group's Amoroso: The markets are questioning if the data center trade will continue Closing Bell Choose CNBC as your preferred source on Google and never miss a moment from the most trusted name in business news.