Seawolf Capital has publicly disclosed a short position in AI computing leasing company CoreWeave. Co-founder Vincent Daniel explained the bearish thesis, comparing CoreWeave to asset leasing firms like Transocean and AerCap, citing uncertain GPU economic life, expanding competitive chip supply, capital-intensive operations, and high financing costs.
Gartner warned that if AI suppliers maintain current capex growth, more than $3.5 trillion in AI infrastructure investment could face impairment risk by 2030, and predicted over 80% of Neocloud providers would cease independent operations. CoreWeave fell 15.46% to $65.78 on Wednesday, Nebius Group dropped 10.08%, and Oracle declined 8.83%.
CoreWeave CEO Michael Intrator told employees in an internal memo that the company's over $104.2 billion order backlog is sufficient to cover all debt obligations, attributing the market selloff to misunderstanding and irrational behavior. The company also disclosed Q2 backlog of $104.2 billion and over $25 billion in net new customer commitments in Q3.
CoreWeave shares closed down about 15.46% on Wednesday, with another near-6% drop in after-hours trading, bringing monthly losses to nearly a quarter. Its $2.75 billion of 9.75% coupon bonds issued in April fell to 81 cents on the dollar, with yields above 15%. Two unsecured bond issues fell below 80 cents, and five-year CDS rose to about 881 basis points, implying a market-priced default probability of over 50% within five years.
Elon Musk shared a report on social media about CoreWeave's bonds falling into distressed territory and surging default-insurance costs, responding with a single "yikes."
CoreWeave announced its entry into the Indian market by partnering with Adani Group's AdaniConneX to lease 240MW of data center capacity at the Taloja campus in Navi Mumbai, comprising three 80MW buildings. The company plans to deploy NVIDIA Vera Rubin platforms, with the first phase expected to go live in mid-2028. It will also set up a local office and hire employees in India, and may double the lease capacity.
Rothschild & Co. Redburn initiated coverage of AI cloud infrastructure companies on Monday, giving sell ratings to CoreWeave and Nebius and arguing that new cloud providers' earnings and valuations are cyclically inflated. It also gave neutral ratings to six former bitcoin mining companies: Core Scientific, TeraWulf, Applied Digital, Cipher Mining, Hut 8 and IREN.
CoreWeave announced Thursday plans to issue $3 billion in senior convertible notes due 2033 and to launch an at-the-market offering of up to 35 million shares. The notes include a $500 million overallotment option, which could bring total financing to $3.5 billion. Shares fell 5.3% in intraday trading on the news.