CoreWeave, Inc. (Nasdaq: CRWV) chief executive Michael Intrator defended its debt position after a selloff this week rattled the US artificial intelligence cloud provider.
Shares fell more than 15% through Friday, while yields on its 2030 bonds approached 16%. Those yields climbed approximately 500 basis points over the period.
Investors questioned whether future income could support the company’s borrowing and expansion costs. CoreWeave carries roughly $52 billion in combined debt and lease obligations.
However, Intrator told employees that its contracted business more than covered its debt obligations, according to an internal memo Reuters saw. Markets sometimes “misunderstand and act irrationally”, he wrote.
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CoreWeave provides computing capacity for companies developing and running artificial intelligence models. Its business requires substantial spending on chips, property and electricity before data centres begin generating rental income.
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As a result, the company must finance construction and equipment purchases before collecting the associated revenue.
CoreWeave recorded a $104.2 billion revenue backlog at the end of the second quarter. That represents contracted future business, rather than cash already collected.
Meanwhile, research firm Gartner warned that specialised AI cloud providers face pressure from the gap between infrastructure spending and revenue.
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It predicts that more than 80% of these providers, known as neoclouds, could cease independent operations by 2030. The forecast does not necessarily mean those businesses will shut down.
CoreWeave’s chief executive defended its financial position after investors sold its shares and bonds over concerns about debt-funded AI expansion.