Source The Verge · Published · Open the original ↗
Capability
CoreWeave’s debt is becoming the whole AI industry’s problem
CoreWeave had a bad week last week. Its bonds slipped into distressed territory by a common definition, when investors demand 1,000 basis points more in yield than they’d get from government bonds. Last Tuesday Chamath “SPAC King” Palihapitiya noticed the distressed debt , and also asked whether the AI buildout was a private credit bubble . Its shares are down more than 20 percent since Tuesday’s close, which is kind of a lot! There even seemed to be some collateral damage in the market on other AI companies, too.
Now, I have also asked if the AI industry is a bubble, but when the SPAC King echoes concerns held by a lady whose ongoing question about AI is “ How are we planning on affording this, champs? ”, that’s a very different signal. When I say “yikes,” it’s one thing. When Elon Musk says it , that’s something else.
The opening of the report, quoted unchanged from The Verge. The full text continues at the source.