Debt-funded AI cloud providers are facing fresh selling pressure as concerns about borrowing costs ripple through the sector, hitting the most leveraged names hardest.
CoreWeave (NASDAQ: CRWV) shares fell 4% to $58.67 in morning trading, touching a new one-year low as HSBC repeated its Reduce rating on the stock in a note published Monday.
HSBC’s accompanying price target sits well below where CoreWeave shares last closed, leaving little ambiguity about the bank’s directional conviction on the stock.
Nebius Group (NASDAQ: NBIS) shares fell even harder than CoreWeave, dropping 5% to $162.20, despite the HSBC note making no direct mention of the company.
Oracle (NYSE: ORCL) offered a striking contrast, slipping just 0.52% to $128.95, reflecting its far broader revenue base and relative insulation from the debt-driven selling sweeping through AI infrastructure names.
HSBC’s note centers on CoreWeave’s revenue per megawatt of capacity, which could trail what larger cloud providers earn given their ability to serve more diversified customers across a wider range of services.
Two additional pressure points identified in the analysis include the risk that slower growth among AI model developers could soften demand for short-term computing capacity, and that rising borrowing costs make financing new infrastructure increasingly difficult.
CoreWeave and Nebius both fund significant portions of their data center expansion with debt, meaning every increase in borrowing costs directly pressures the economics of each new facility either company builds.
CoreWeave’s credit markets are sending distress signals, with the company’s bond yields and credit default swap pricing at levels that give the bearish case substantial weight even as a large revenue backlog and several high-priced short-term contracts signed between May and September support the bull argument.
The First Trust Cloud Computing ETF (NASDAQ: SKYY), which holds both CoreWeave and Oracle shares, remained flat at $161.08, suggesting the damage is concentrated in debt-reliant neoclouds rather than spreading broadly across cloud-related equities.
The Invesco QQQ Trust (NASDAQ: QQQ) declined 0.75% to $712.98, reflecting softer conditions across large-cap technology more broadly, though that move pales beside the losses in CoreWeave and Nebius.
Oracle’s database, enterprise software, and cloud infrastructure revenues give the company multiple income streams that sit well outside the GPU-leasing model that ties CoreWeave and Nebius so directly to financing conditions.
The central question now facing CoreWeave investors is whether the company can continue financing new capacity without borrowing costs climbing further, a dynamic that makes the stock acutely sensitive to any shift in credit markets.
