Advertisement
CoreWeave shares rose on Monday after the AI infrastructure firm announced plans to raise $1.5 billion through a senior notes offering aimed at strengthening its balance sheet and supporting growth. The stock gained 4.5% following the news, as investors reacted positively to the company’s efforts to meet sustained demand for AI computing capacity.
The bond, maturing in 2031, will be offered to qualified institutional buyers and non-U.S. investors under Rule 144A and Regulation S. It will be guaranteed on a senior unsecured basis by certain wholly owned subsidiaries. This comes as CoreWeave continues to operate with high leverage, reporting $8 billion in total debt as of December 2024. The offering follows a $2 billion debt issuance in May, prompting some analysts to question whether the company is refinancing rather than deleveraging through organic growth.
Despite these concerns, analysts remain optimistic about the company’s near-term performance. Barclays analyst Raimo Lenschow noted that current expectations for 10% quarter-on-quarter growth might be too conservative given ongoing business momentum, particularly related to Microsoft’s B200 ramp-up. Lenschow maintained a $140 price target, citing both strong AI demand and valuation constraints, with shares trading at roughly 50 times expected 2026 EBITDA.
CoreWeave’s stock has had a volatile run since going public in March, initially surging from $40 to $187 before stabilising in the $125–$140 range. The company’s infrastructure, which it claims is significantly faster and cheaper than competitors like AWS and Google Cloud, has helped it secure a leading role in the AI sector. However, the pace of expansion and heavy reliance on debt raise long-term concerns about cash flow and financial stability, especially if hyperscaler spending slows or AI adoption underperforms.
Moody’s assigned a B1 rating to the new notes and kept CoreWeave’s overall corporate rating at Ba3 with a stable outlook. Fitch rated the notes at BB- with a recovery rating of RR4. Both agencies acknowledged the company’s strong revenue pipeline, backed by a $25.9 billion backlog, and expected EBITDA growth through 2026. They also noted CoreWeave’s customer concentration and high leverage as key risks, though they projected leverage could fall below 3.5 times by the end of 2026 if performance remains strong.
Second-quarter revenue is projected at around $1.2 billion, possibly beating consensus expectations and supporting further gains in earnings. However, the end of CoreWeave’s post-IPO lock-up period, which occurs just two days after its earnings release, could limit upside in the stock price in the short term.