AI-focused cloud provider CoreWeave is embarking on a significant debt-raising effort, aiming for $1.5 billion or potentially more, mere weeks after a challenging March 2025 stock market debut. The company, which specializes in providing high-demand Nvidia GPU-powered cloud services for artificial intelligence, is currently engaged in a roadshow with bankers at JPMorgan to gauge investor appetite for deals expected to include a high-yield bond offering, according to a report from the Financial Times.
This strategic financial maneuver is primarily aimed at restructuring CoreWeave’s considerable existing debt, much of which was secured at high interest rates, to lower its overall borrowing expenses, although a portion of the new capital might also be allocated to further investments in its rapidly expanding operations.
The move comes as CoreWeave navigates the volatile AI sector. Its initial public offering was downsized to $1.5 billion at $40 per share—a figure substantially reduced from its original $2.7 billion target—due to investor concerns over its heavy debt load and the sustainability of the booming AI infrastructure market.
However, CoreWeave’s stock has since demonstrated resilience, climbing by approximately a third to $55 per share by early May 2025. This uptick was largely attributed to reassuring capital expenditure forecasts from key clients Microsoft and Meta, as detailed by CNBC.
CoreWeave’s rapid expansion, which saw revenues surge from $16 million in 2022 to $1.9 billion in 2024, was financed heavily through borrowing, accumulating $12.9 billion in debt over the preceding two years. By December 2024, its balance sheet carried roughly $8 billion in total debt, a significant portion of which originated from private credit arrangements with firms like Blackstone and Magnetar Capital, featuring interest rates between 11% and 15%.
The proposed new bonds would notably be unsecured, a departure from CoreWeave’s prior reliance on loans collateralized by its assets, including its extensive inventory of Nvidia AI chips and significant customer contracts.
Navigating Client Dynamics and Market Perception
The backdrop to this debt initiative includes a shifting landscape with major clients. While Microsoft accounted for 62% of CoreWeave’s 2024 revenue, the tech giant passed on a $12 billion contract option with CoreWeave prior to the IPO. Instead, OpenAI, a major Microsoft partner, stepped in to secure an $11.9 billion, five-year agreement with CoreWeave for GPU cloud services, and also invested $350 million in CoreWeave shares through a private placement linked to the IPO.
CoreWeave has consistently pushed back against narratives of instability, with a spokesperson telling Winbuzzer that “have been no contract cancellations or walking away from commitments. Any claim to the contrary is false and misleading.”
Microsoft’s evolving AI strategy, which includes increased investment in its own Azure Maia and Cobalt AI chips Microsoft has partnered with AMD and a reported pullback from some external AI data center leases canceled multiple AI data center leases, has been a focal point.
Despite these adjustments, Microsoft CEO Satya Nadella recently downplayed concerns, stating, “The reality is we’ve always been making adjustments to build, lease, what pace we build all through the last, whatever, 10, 15 years,… It’s just that you all pay a lot more attention to what we do quarter-over-quarter nowadays.” and the company reiterated its capital expenditure guidance for the upcoming fiscal year. This, along with Meta’s increased capex forecast, helped CoreWeave’s stock rally in early May.
CoreWeave’s pre-IPO financial disclosures, including its SEC filing, candidly acknowledged its reliance on major clients, noting that “any negative changes in demand from Microsoft… would adversely affect our business, operating results, financial condition, and future prospects.” CoreWeave faces debt and interest payments amounting to $7.5 billion by the end of 2026. The company’s net loss in 2024 stood at $863 million, despite its impressive revenue growth.
Navigating Debt and Future Growth
The current roadshow for CoreWeave’s debt offering has reportedly garnered strong initial interest, especially for secured tranches, though some investors remain cautious about the unsecured high-yield bonds given the company’s leverage. Appetite is reportedly being tested for yields in the 9-10% range for this portion.
The decision to issue unsecured debt could either seen as a sign of CoreWeave’s growing confidence or one of weakness. Issuing unsecured bonds is a bold step for a company in such a capital-intensive and rapidly evolving sector. It signals they believe their underlying assets and contracts are strong enough not to require specific collateral for this new raise.
This confidence likely stems from its substantial, long-term contracts, such as the one with OpenAI, and the continued robust demand for AI compute power. CoreWeave’s infrastructure is built around Nvidia’s GPUs, including the older Hopper-based chips. The transition to Nvidia’s newer Blackwell GPU architecture, introduced in March, presents both an opportunity for enhanced performance and a logistical challenge concerning inventory and supply chain, which CoreWeave acknowledged in its IPO filings by citing the risk of “asymmetry and delays.”
CoreWeave’s journey began in 2017 with cryptocurrency mining before pivoting to AI cloud services. Its early partnership with Microsoft, inked in June 2023 to support the computational needs of services like ChatGPT, was a critical catalyst for its expansion. At that time, CoreWeave CEO Michael Intrator conveyed significant optimism about the company’s rapid growth to BusinessWire. The company’s first earnings report as a public entity is anticipated on May 14, 2025.