CoreWeave credit default swaps hit distress levels as investors sour on AI debt

CoreWeave’s financing trouble kept deepening on Thursday, and the pressure didn’t stay neatly inside one stock. The AI infrastructure company, which has piled up more than $51 billion of debt and obligations, is now getting hit from both sides: its bonds are selling off and its credit protection is flashing distress.

The clearest warning sign is in the debt market. CoreWeave’s 9.75% bond due in 2031 was showing a yield to maturity of 15.78%, while the spread on its five-year credit default swaps briefly blew past 1,140 basis points and later sat near 1,038. That’s up 16% from a week ago and 164% from a year earlier. At those levels, the market is basically saying the company’s borrowings look a lot less comfortable than they did not long ago.

This is not happening in a vacuum. CoreWeave stock fell sharply on Wednesday, then bounced and closed 5.94% higher on Thursday. Nebius and Iren were also under pressure during the session. And the anxiety is leaking into other AI names too, with Micron Technology and Advanced Micro Devices both moving lower after a sell-off in South Korean chip stocks, even though Micron finished up 1.87% and AMD ended down 1.5%.

The core issue is simple: investors still believe demand for CoreWeave’s services is real, but they are far less sure the cash will show up soon enough to cover all the spending. Gavan Nolan of S&P Global Market Intelligence said a level above 1,000 basis points is generally a sign of credit distress. Evercore ISI’s trading desk put it even more bluntly, saying the market is effectively rejecting AI debt without operating cash flow support.

CoreWeave CEO Mike Intrator brushed off the sell-off in a memo, saying markets sometimes misunderstand new technology companies and pointing to a backlog that he said more than covers the debt. Deutsche Bank said that backlog is over $100 billion, with around two-thirds tied to investment-grade counterparties such as Microsoft, Meta, IBM and Caterpillar. But that hasn’t calmed the mood. Jim Reid of Deutsche Bank warned the fear itself could become a self-fulfilling prophecy, and Oracle’s own five-year CDS spread jumped too, hinting that this may be bigger than one company.