CoreWeave shares and bonds tumble as AI borrowing concerns mount

The selloff extended beyond CoreWeave. Oracle shares tumbled nearly 7% on Wednesday, and the yield to maturity on its 6.25% bond due in November 2032 sat at 7.24%. The Nasdaq Composite lost 1.4%, with the debt concern hitting shakier technology stocks outside the Magnificent Seven especially hard. Another neocloud stock, Nebius, dropped 9%, while a later CNBC report said Nebius Group and Iren fell as much as 10%. Dell cratered 10%.

Investor sentiment has shifted, said Luis Alvarado, co-head of global fixed income strategy at Wells Fargo Investment Institute. "The era of easy money, which we experienced in the first nine months of the year, is starting to disappear and dissipate," he said. "Now the extra dollar or the marginal dollar is going to be more looked at with a microscope into the concessions that the issuer is giving you back."

Tech investor Chamath Palihapitiya, founder and CEO of Social Capital and CEO of AI company 8090, called out the soaring yields on X late Tuesday. He shared a chart of CoreWeave's 2032 bond, saying the yield "touched 15%" and then "closed at a new high" on Tuesday. He also included part of a deep dive into whether the AI build-out is creating a private credit bubble, noting "how little extra lenders appear to charge for AI risk." Tesla and SpaceX CEO Elon Musk responded, "yikes."

In options markets, traders bet that CoreWeave could fall further. Options volume in CoreWeave surged to more than seven times its 30-day average, while Nebius volume was almost four times normal and Iren twice normal, according to CNBC. More calls traded than puts in Nebius and Iren, but in both, more calls were likely initiated by sellers than buyers, according to Cboe LiveVol data. The most bearish action was in CoreWeave, where traders bought just shy of 200,000 puts, compared with 106,000 calls.

One standout trade occurred around 10 a.m. ET, when someone opened a new position of 26,000 37.5-strike puts expiring Dec. 18 that traded near the ask price, suggesting the puts were purchased, according to SpotGamma data. Scott Bauer, CEO of Chicago-based Prosper Trading Academy, described them as "bubble puts." "These are not rip-ups that you buy thinking they'll go to zero," he said. "This is the hub, the center of the AI trade, and likely some kind of margin play for someone to hedge their exposure in highly correlated stocks or maybe even the Nasdaq." The contracts sold for 74 cents apiece for a total of $1.9 million and would need CoreWeave to erase another 42% over the next two months to pay off. Before the trade, there were just over 1,000 open contracts, making the position a new one. CoreWeave went public in March 2025 at $40 per share. Bauer added that the buyer might have been an early investor or IPO participant using the trade as a breakeven level, and might not have been able to get similar protection in other stocks, the index or other products.

The debt concerns have been building as companies race to build AI infrastructure and turn to credit markets to finance projects, increasing supply. CNBC reported that hyperscalers are on track to spend $800 billion this year, according to JPMorgan, and that the bank expects annual spending to exceed $1 trillion by 2027. A Financial Times article that CoreWeave is targeting insurance companies for further debt financing apparently did not help sentiment, CNBC reported.