CoreWeave shares jumped 6% in premarket trading Monday after Goldman Sachs upgraded the AI cloud provider from Neutral to Buy. The upgrade came despite a bond-market selloff that pushed yields on CoreWeave's debt toward 15%. CoreWeave shares lost roughly a quarter of their value last week as investors questioned whether CoreWeave could sustain an ambitious AI infrastructure buildout.
Goldman argued that CoreWeave ranks among the strongest operators in the AI cloud industry. Goldman analysts led by Gabriela Borges expect CoreWeave to finance future expansion at borrowing costs only modestly above existing levels. However, Reuters reported that CoreWeave debt issued in June at a yield of 9.675% was trading near 15% last week. The 15% yield reflects what investors now demand to buy CoreWeave's existing bonds, not what CoreWeave currently pays in interest.
Billionaire investor Chamath Palihapitiya estimated on Friday's All-In podcast that CoreWeave needs another $35 billion in borrowing to finance existing customer commitments. CoreWeave signs long-term contracts before borrowing money to build the infrastructure needed to fulfill those contracts. Rising interest costs could therefore erode returns on deals already signed. Andreessen Horowitz co-founder Ben Horowitz warned on the same podcast that neoclouds have complicated financing arrangements.
However, David Sacks offered a more optimistic interpretation on All-In. Sacks said his impression was that financing the projects did not involve a deeper credit problem. Sacks argued that CoreWeave finances individual projects against valuable GPUs and contracts with creditworthy customers such as Microsoft.
Semiconductor research firm SemiAnalysis documented a 5.9% rate on a tranche of CoreWeave's Meta-backed financing in July. SemiAnalysis compared that rate with roughly 10% on CoreWeave's unsecured bonds at the time. The gap shows why loans backed by major technology customers can be considerably cheaper.
Polymarket traders on Monday assigned a 29% chance to CoreWeave announcing bankruptcy by the end of 2029. Approximately $270,000 had been traded across the market. D.A. Davidson analyst Gil Luria warned last week that shareholders could lose everything if the AI spending boom falters. However, Goldman believes CoreWeave can continue financing expansion at manageable borrowing costs.
Goldman Upgrades CoreWeave to Buy Despite 15% Bond Yields
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Summary
CoreWeave (NASDAQ:CRWV) climbed 6% in premarket trading after Goldman Sachs raised its rating to Buy from Neutral. The move comes as altcoins to watch gain traction, with on-chain data showing renewed interest in AI-driven assets. CoreWeave’s bond yields hit 15%, but Goldman expects manageable borrowing costs for future expansion. Shares had dropped 25% last week amid concerns over funding AI infrastructure growth.
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