CoreWeave bond yields hit 15% in AI debt rout that analysts warn could be a 'turning point' for the whole sector

CoreWeave's bonds have slumped from a June issue yield of 9.675% to 15% — a level that qualifies as distressed debt — triggering a wave of selling in AI infrastructure and semiconductor stocks. Nvidia chief executive Jensen Huang, speaking in Stockholm, pushed back against concerns about CoreWeave, saying its financial strength was "improving every day" and that its cost of capital was "actually decreasing." Nebius, Applied Digital, Iren, Dell and Hewlett Packard Enterprise were all caught in the downturn as investors demanded higher returns for backing AI expansion.

CoreWeave is carrying roughly $50 billion in debt, with analysts questioning whether AI demand will generate returns fast enough to justify the borrowing.

Max Frumes of credit analytics firm 9fin called CoreWeave "the canary in the coal mine," warning AI-linked debt will get "more expensive" with "a lot more scrutiny."

Portfolio manager John Han at F/m Investments said his firm is "taking another look" at all its AI infrastructure exposures to assess whether risks are being adequately priced.