As debt default risks raise market concerns, CoreWeave (CRWV.US) receives strong support from Jensen Huang: financial strength continues to improve and financing costs are decreasing

According to Zhitong Finance APP, as debt risks at AI cloud computing service provider CoreWeave (CRWV.US) spark market concerns, Nvidia (NVDA.US) CEO Jensen Huang has stepped up to support this critical partner and investment target. He stated that CoreWeave’s financial strength is continuously improving, its financing costs are actually dropping, and he does not currently see a need for Nvidia to provide additional financial guarantees. In an interview during an event in Stockholm, Sweden, Huang said, “CoreWeave is getting stronger every day.”

When asked if Nvidia needs to provide CoreWeave with financial support, Huang said there was no such necessity and emphasized his optimism about the company’s outlook. “I am very optimistic. In fact, their cost of capital is declining.”

Huang’s latest comments come as CoreWeave faces mounting pressure in the bond market. Although demand for AI computing power remains robust, investors are re-examining the business model of emerging AI cloud companies like CoreWeave, which rely heavily on debt to build data centers, as well as considering the financial risks stemming from related financing arrangements.

According to ICE Data Services, CoreWeave’s five-year credit default swap (CDS) spread once widened by 74.5 basis points, rising to 1,194.5 basis points—setting an intraday record high. CDS are typically used by investors to hedge against corporate debt default risks, and a rise in prices means the market requires higher compensation for default risk.

Based on associated CDS market pricing, CoreWeave’s implied default probability over the next five years has surpassed 60%, indicating that bond investors’ concerns about its debt repayment ability have intensified significantly.

However, it should be noted that this probability reflects the pricing of the credit derivatives market and does not necessarily mean CoreWeave’s actual probability of default in the next five years will reach that level.

CoreWeave is one of the representative companies in the recent wave of AI infrastructure investment. As tech giants and AI developers continually increase their demand for computing power, the company has rapidly expanded its business by massively purchasing Nvidia GPUs, building data centers, and providing AI computing services to customers. However, this growth model demands continuous injections of large capital.

Because purchasing data centers and GPUs often needs to be done before receiving customer payments, CoreWeave heavily relies on debt financing and other external funding sources to support its infrastructure construction.

As the scale of financing expands, investors are increasingly concerned that if the cost of financing rises, AI demand growth slows, or customer contracts fail to generate sufficient cash flow, the company may face growing financial pressure.

Meanwhile, the close business and capital ties between CoreWeave and Nvidia have also made it an important case for the market in evaluating the sustainability of the AI infrastructure investment model. Nvidia is not only a key GPU supplier for CoreWeave but is also its second-largest shareholder, holding about 10% of the company’s equity.

This relationship enables CoreWeave to access critical AI computing hardware and industrial support, but on the other hand, it also raises market concerns about so-called “circular financing” — where AI chip suppliers support downstream customers through investment or financing arrangements, and those customers then use the funds to purchase the suppliers’ products.

The market worries that such funding cycles may exaggerate the apparent scale of AI infrastructure demand, making it difficult for investors to accurately determine the end-client demand and actual profitability of related projects.

As a result, CoreWeave is seen as a crucial test case for whether the business model of emerging AI cloud computing companies can be sustained in the long run.

For Nvidia, CoreWeave’s financial status not only relates to the value of its equity investment but also impacts the market’s judgment of AI computing power demand and infrastructure investment sustainability. If up-and-coming cloud companies like CoreWeave can improve their financial standing while continuing to expand, it will help bolster investor confidence in the AI infrastructure investment cycle; conversely, if the debt pressure on such companies continues to worsen, it could further fuel skepticism about the AI investment boom.

Huang’s emphasis on CoreWeave’s improving financial strength and declining financing costs stands in sharp contrast to the recent risk signals from the credit markets.

However, during the interview, Huang did not provide any specific financial data to support his assertion.

Against the backdrop of significantly increased default risk pricing, investors will next focus on whether CoreWeave can secure new financing at reasonable costs, improve cash flow, and control its debt burden while continuing to expand AI computing power supply. For the entire AI industry, CoreWeave’s financing situation is becoming a key indicator in assessing whether the current investment frenzy in AI infrastructure can translate into sustainable commercial returns.

As of press time, CoreWeave (CRWV.US) narrowed its loss to 2.89%, after having fallen nearly 15% earlier.