CoreWeave shares continued their steep decline this month, falling to $65 in extended trading, a 53% drop from their 2025 high. The sell-off has erased billions in market value as investors reassess the risks facing the neocloud sector. The company's bond yields have also climbed sharply, signaling growing unease about its debt load.
The pressure intensified after Gartner issued a warning that neocloud providers and hyperscalers will keep spending heavily in the coming years, but also cautioned that neoclouds are particularly vulnerable to large writedowns expected around 2030. CoreWeave, which transitioned from Bitcoin mining to become a major AI infrastructure player, has built a revenue backlog exceeding $104 billion and counts some of the largest tech companies as clients.
However, this growth has come at a cost. CoreWeave's total debt has surged to nearly $30 billion, and its outstanding share count has continued to rise, diluting existing shareholders. The company is spending billions on GPUs and servers to support the AI boom, but its depreciation assumptions are being questioned.
CoreWeave assumes a useful life of about six years for its hardware, after which it plans to sell the GPUs at a favorable price. Analysts, including Michael Burry, argue that the actual useful life is closer to two or three years, as newer, more advanced chips quickly replace current models. Just this week, Microsoft unveiled its Azure Maia 300 chip, which it claims outperforms Nvidia's offerings.
The company has already reported significant depreciation and amortization of over $1.3 billion, a substantial figure relative to its total revenue of $2.57 billion. These concerns have pushed CoreWeave's bond yields to 14.30% for notes maturing in 2032, up sharply from a year-to-date low of 9.4%. Higher yields mean the company will face increased interest expenses; in its latest earnings, interest expense rose to $640 million.
From a technical perspective, CoreWeave's stock has broken below key support at $78.17, its September low, and is trading under both the 50-day and 100-day exponential moving averages. This bearish setup suggests further downside, with the next target around $50. A move above $75 would negate the current bearish outlook.
The broader market context includes rising bond yields, which have pressured growth and technology stocks. Investors are closely watching whether CoreWeave can manage its debt and depreciation risks while maintaining its growth trajectory.
This article is for informational purposes only and does not constitute financial advice.
