CoreWeave Goes Dumpster Diving With $2 Billion Junk Bond Raise… Investors Lose Their Minds…

If you’re curious as to why shares of CoreWeave melted faces this week… It's because they just Jedi mind-tricked the market to fork over $2 billion for the privilege of owning unsecured paper with a 9.25% yield, and investors lined up like they were being offered a free Tesla and a colonoscopy at the same time. 

(Source: Giphy) 

In short, the bond was five times oversubscribed. That means the clowns in credit are so desperate for yield they’re willing to bet on a data center leasing company whose business model is simply renting out Nvidia GPUs with the hope that AI doesn’t derail before 2030. The result? The stock levitated 19% in one day. Bigly. 

According to statements, CoreWeave is using the new, even sexier debt of $2 billion to pay off older debt. So, yes, this is refinancing. But the bonds are unsecured. Translation: you get nothing if they default, unless you’re cool with salvaging broken server racks and half a rack of A100s. And the debt doesn’t mature until 2030. Oh, and the S&P gave them a B+ rating. Again, that’s junk. Actual, no-debate, deep-in-the-filth junk. But the analysts still wrote a paragraph about how supplier concentration with Nvidia and customer dependency on Microsoft “could pose a risk” in three to five years. 

(Source: CNBC) 

On the other hand, this  isn’t CoreWeave’s first massive debt raise, either. In 2023, it suckered secured a $7.5 billion debt package led by Blackstone and Magnetar, one of the largest private financings in the space. Now, with $17.2 billion in combined equity and debt on the books, the company is doubling down on its plan to scale AI infrastructure at a speed that makes traditional cloud providers look cautious. 

But why the need for a raise? Well, if you recall, CoreWeave’s IPO in March came in well below expectations. The company had hoped to raise $2.7 billion but had to settle for $1.5 billion. So this is designed to fill that void they were hoping for. And given the demand for exposure to AI remains high, CoreWeave is positioned to ride that momentum, even if fundamentals aren’t doing the heavy lifting. In fact, CEO Michael Intrator told CNBC last week that the company is responding directly to “demand signals” from its largest clients and positioning itself to meet the infrastructure requirements of next-gen AI models. He acknowledged investor concerns about durability and scale but pushed back against skepticism around the company’s spend-heavy approach.

(Source: Giphy) 

The broader context of all this is that bond markets have been starving for high-yield paper. April’s market volatility and trade policy uncertainty left a gap in new issuance, and CoreWeave’s deal landed at the right moment. Now it needs to friggin’ justify the debt. The cash burn is still obscene, and the capex plans are lethal. The company isn’t pretending to be lean… it’s making a bet that demand for AI compute continues to grow fast enough to outrun its financing costs. That works in a zero-rate fantasy. At 9.25%, it’s a different game.

But hey for now, investors are hot and bothered over CoreWeave. The company just raised more scratch in a week than some publicly traded cloud providers will see all year. Whether that confidence holds is going to depend on more than just demand signals and GPU shipments. But for a company that started as a crypto miner in 2017 and mutated into AI infrastructure, anything is possible. Meaning, keep your eyes on CoreWeave going forward and place those bets accordingly. Until next time, friends… 

P.S. Some fat cat executive just sold $9.4 million of their company's stock… a company, mind you, that’s single-handedly responsible for your kid’s sugar rush before 8 a.m. Curious to see why? Click here to join Stocks.News premium and get these insider transactions delivered to you on a silver platter. 

Stocks.News holds positions in Tesla and Microsoft as mentioned in the article.