CoreWeave bonds yield over 16% as neocloud credit fears bite before earnings

CoreWeave reports quarterly results Tuesday, with Nebius following Thursday, and investors want a plan for a credit market that has stopped being friendly. Yields on some CoreWeave bonds maturing in 2031 jumped above 16%, while the spread on its five-year credit default swaps surged past 1,240 basis points, up 50% in the past month. Analysts polled by LSEG expect CoreWeave revenue to grow about 160% from a year earlier, reaching $3.55 billion, and Nebius to post sixfold growth, hitting roughly $908 million.

The setup got uglier last Thursday, when neoclouds suffered dramatic drops and helped push the Nasdaq to its steepest slump in 19 months. Leading chipmakers Nvidia, Advanced Micro Devices and Micron also plummeted on worry that anti-AI sentiment would complicate buildout plans. Politics added to the pain: Democrats won governors' races in Georgia, Iowa, Nevada, Ohio and Texas last week, and voters rejected data centers in 40 of the 41 related measures on ballots nationwide.

CoreWeave CEO Mike Intrator took to LinkedIn to calm nerves, writing that the company does not currently anticipate any impact to existing customer commitments or the associated backlog from the political shift. The balance sheet he's defending: $5.5 billion in cash and $35 billion in debt at the end of June, including $1.3 billion owed at a 15% rate on a facility due March 2028 and $3.2 billion on an August 2030 facility at 11%. Morningstar analyst Luke Yang told CNBC that bankruptcy isn't imminent and existing contracts are funded, but five years of growth need fresh capital — and he wants to hear how management closes that financing gap.

Smaller neocloud IREN offered the market some relief. It reported that about 48% of its backlog is tied to Microsoft, but AI cloud revenue more than doubled from the prior period, and the stock jumped 20% on Friday to recoup Thursday's losses. Co-CEO Daniel Roberts told CNBC there's a disconnect between what the public market shows and what customers are doing, while conceding that capital markets have turned selective and questions have moved from how big a contract is to whether it can be delivered, financed and run at a profit. IREN carries $10 billion in debt.

For Partners Group chief investment strategist Anastasia Amoroso, neoclouds will be the hardest hit because the top players are unprofitable and lean on a handful of customers, unlike hyperscalers Amazon and Microsoft. Freedom Capital Markets' Paul Meeks called the narrative a self-fulfilling doom cycle, where creditor worry forces CoreWeave to borrow at exorbitant rates to fund AI infrastructure. He models CoreWeave revenue climbing from $5 billion in 2025 to $42 billion in 2028 with an EBITDA margin near 70% that year, and expects both earnings reports to give the market some relief — while admitting he won't downplay the credit risk.

The IPO window isn't helping the story: U.K.-based Nscale filed paperwork in September but hasn't published an updated prospectus since, SB Energy filed in early September and sits in a similar spot, and Australia's Firmus nixed its listing last month. Nvidia, a major investor in CoreWeave and Nebius, has its own fresh turbulence after CEO Jensen Huang admitted Sunday to an extramarital affair with a business executive that intelligence agencies say is a Chinese spy — news that could add volatility to a jittery market. CoreWeave declined to comment, and Nebius didn't respond to a request for comment.