Markets
CoreWeave and Nebius Fell 12% Again. A Quarter of Their Value Is Gone in a Week
CoreWeave dropped 11.91% to $61.39 on October 16 and Nebius 12.18% to $165.47, a day after both had bounced. Over the week the two AI cloud providers lost 25.21% and 25.15%; Oracle fell 4.64%, and Dell, Super Micro and Vertiv have each lost 15% or more since October 9.
Thursday's bounce lasted one session. CoreWeave, which had risen 5.9% on October 15, fell 11.91% on Friday to $61.39 on 95 million shares, and Nebius lost 12.18% to $165.47. Since the close of October 9 the two companies that rent out Nvidia chips by the hour have lost 25.21% and 25.15% of their market value. Since mid-September the declines are 23% and 24%.
The trigger has not changed since Wednesday: the bonds. CoreWeave's unsecured notes due 2032 traded below 80 cents on the dollar, Bloomberg reported, and yields on its 2031 and 2032 debt rose close to 15%, according to CNBC. The company's total debt reached about $52 billion at the end of June, from about $15 billion a year earlier. Chief executive Mike Intrator called the reaction irrational in a memo obtained by CNBC and said the backlog of customer contracts more than covers the debt; the market has so far priced the backlog at a discount and the debt at face value.
The selling spread to everyone who sells into the build-out. Oracle fell 4.64% to $128.23, down 9.31% on the week, after its 6.25% notes due 2032 yielded about 7.24% on Wednesday. Dell lost 4.58% (22.92% on the week), Super Micro 9.86% (24.44%), Vertiv 3.88% (14.98%), Arista 4.63% (18.34%) and Marvell 5.56%. Palantir, which sells software rather than hardware, fell 7.22%. Alphabet, Amazon, Meta and Oracle together have issued more than $228 billion of bonds this year as of October 13, according to LSEG data cited by CNBC.
One thing is worth noticing about what did not move. The 10-year Treasury yield ended the week at 5.10%, lower than a week earlier, and the high-yield bond ETF (HYG) fell just 0.48% on the week. This is not a market-wide credit scare; it is a repricing of a handful of borrowers whose spending runs far ahead of their revenue, by investors who, according to Goldman Sachs's prime desk, cut long positions at three and a half times the rate they added shorts.
The next catalysts belong to the customers rather than the suppliers. Meta reports on October 21 and its 2027 capital spending plan will be read as a verdict on how much of this capacity gets rented; Microsoft and Alphabet follow on October 28. Until then, a stock that fell 16% on Wednesday, rose 6% on Thursday and fell 12% on Friday is trading on bond prices and rumours, not on anything its customers have said.