CoreWeave (CRWV) has seen its stock price fall more than 60% from its June record high amid growing concerns that the AI ​​infrastructure boom has reached its peak.
New details reported Tuesday by The Wall Street Journal highlight how fragile construction has become as operational delays collide with significant debt and tighter credit conditions.
Investors are increasingly focusing on two main risks related to CRWV, according to the article. First, the company relies heavily on high-interest debt to finance purchases of advanced AI chips from NVIDIA (NVDA). Second, the company relies on a small number of large customers, including OpenAI, Microsoft (MSFT), and Meta (META), for the majority of its revenue.
Some of CoreWeave’s problems stemmed from a fundamental construction setback, the story continues. Heavy rain in North Texas delayed concrete pouring at a major data center site, pushing back deadlines for IT capacity delivery. Which shows that even typical infrastructure bottlenecks can disrupt billion-dollar AI investment plans.
Investor confidence weakened further in late October when CoreWeave’s proposed $9 billion acquisition of Core Scientific collapsed. Core Scientific (CORZ), a former Bitcoin miner turned data center owner, rejected the deal after shareholders warned it would expose them to stock price volatility and CoreWeave’s leveraged balance sheet.
Shares of Oracle (ORCL) and Broadcom (AVGO) fell by double-digit percentages over the past week following recent third-quarter results, with both companies signaling a slower timetable for AI-related spending.
Bitcoin miners feeling the pain
Spinoffs from crypto mining and AI are the result of new, diversified revenues for bitcoin miners. IREN (IREN) and Cipher Mining (CIFR) have moved towards AI focused on high-performance computing, signing clients including Microsoft. Each had already surged more than 500% this year, but both are down about 50% in recent weeks. Another source of concern, meanwhile, is that the Bitcoin mining sector is increasingly relying on debt to finance its expansion.
CoreWeave shares fell another 4% on Tuesday, trading below $70 for the first time since May.
