CoreWeave ( CRWV ) has seen its share price fall more than 60% from its June high amid growing concerns that the AI ​​infrastructure boom may have peaked.
New details reported Tuesday by the Wall Street Journal highlight how fragile the expansion has become as operational delays collide with heavy leverage and tighter credit conditions.
Investors are increasingly focused on two core risks with CRWV, according to the story. 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 engineering setback, the story continued. Heavy rains in North Texas delayed concrete pouring at a major data center site, pushing back computing capacity delivery times. Which shows that even routine infrastructure bottlenecks can disrupt trillion-dollar AI investment plans.
Investor confidence weakened further in late October when CoreWeaves’ proposed $9 billion acquisition of Core Scientific collapsed. Core Scientific ( CORZ ), a former bitcoin miner turned data center lessor, rejected the deal after shareholders warned it would expose them to CoreWeave’s volatile stock price and leveraged balance sheet.
Shares of Oracle ( ORCL ) and Broadcom ( AVGO ) have fallen by double-digit percentages in the past week following recent third-quarter earnings, with both companies flagging slower timing for AI-related spending.
Bitcoin miners are feeling the pain
The spillover of crypto and AI mining has occurred as a result of new diversified income for bitcoin miners. IREN (IREN) and Cipher Mining (CIFR) have pivoted to artificial intelligence, focusing on high-performance computing, and signing clients including Microsoft. Each had previously risen over 500% this year, but both have fallen around 50% in recent weeks. Another cause for concern, meanwhile, is that the bitcoin mining sector is increasingly relying on debt to finance expansion.
CoreWeave shares are down another 4% on Tuesday, trading below $70 for the first time since May.
