Shares of CoreWeave, the Nvidia-backed "neocloud" company that rents out AI computing power, closed down 11.9% on Friday at $61.39, extending a brutal week that has wiped out roughly a fifth of the stock's value and reignited fears that the artificial-intelligence buildout is being financed by debt the industry cannot easily service. The stock has now lost more than half its value over the past year.

The selloff accelerated after CoreWeave's five-year credit default swaps — contracts that function as insurance against the company defaulting on its debt — spiked to a record intraday level of 1,194.5 basis points on Thursday, according to ICE Data Services. Under standard market pricing conventions, that implies traders see better than a 60% chance the company defaults within five years. CoreWeave's bonds have been trading like distressed debt: its 9.625% notes due 2032 touched a 15% yield this week, and its 9.75% notes due 2031 slipped as low as roughly 82 cents on the dollar, according to CNBC.

A $50 billion bet on AI demand

CoreWeave has become a bellwether for the broader AI infrastructure trade. The company carries roughly $50 billion in debt and lease obligations and is expected to spend tens of billions of dollars a year through the end of the decade building data centers packed with Nvidia chips for customers including Microsoft, Meta and OpenAI. S&P Global rates the company B+, deep in junk territory, and analysts have grown nervous that if AI spending slows even slightly, CoreWeave's leveraged model could unravel quickly. CoreWeave reported revenue of roughly $2.6 billion last quarter, up 112% year-over-year, but a net loss of $626 million that more than doubled from a year earlier.

The anxiety has spilled well beyond CoreWeave. Oracle, Nebius, IREN and Applied Digital — other companies racing to build AI data-center capacity — all fell sharply alongside it this week, and a Gartner forecast warning that most independent "neocloud" operators won't survive as standalone businesses past 2030 added to the unease.

CoreWeave CEO Mike Intrator pushed back in an internal memo to staff, reported by Reuters, arguing the market can "misunderstand and act irrationally" and that troubles at rival AI financing deals "are bleeding into the narrative around CoreWeave." He told employees the company's $104.2 billion revenue backlog — bolstered by more than $25 billion in new customer commitments signed this quarter — more than covers its debt obligations.

"The market can sometimes misunderstand and act irrationally." — CoreWeave CEO Mike Intrator, in a memo to employees, as reported by Reuters

Nvidia CEO Jensen Huang, speaking at an event in Stockholm, offered his own vote of confidence, saying CoreWeave's financial position is improving and that Nvidia sees no need to backstop the company. Nvidia already has a $6.3 billion capacity-purchase agreement with CoreWeave running through 2032, which some analysts say effectively functions as a backstop regardless of Huang's framing.

The jitters rippled into Friday's broader market session: the Nasdaq Composite fell 2.14% and the S&P 500 dropped 1.09%, with Wall Street's VIX volatility gauge jumping roughly 21% as traders priced in more turbulence ahead of Meta's upcoming earnings report, which investors are watching closely for signs of whether the wider AI spending boom is still paying off. Whether CoreWeave's backlog proves as solid as its CEO insists — or whether the credit markets are seeing a crack in the AI buildout's financing — is likely to stay the central question hanging over tech stocks heading into next week's heavy slate of earnings.