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Investing.com -- CoreWeave Inc (NASDAQ:CRWV) shares jumped on Monday after the AI infrastructure provider unveiled plans to raise $1.5 billion through a senior notes offering, bolstering its balance sheet to support continued growth. The stock surged 4.5% following the announcement as investors responded to the company’s move to lean into long-term demand for AI compute capacity.
The new 2031-dated bond comes as CoreWeave continues to navigate a stretched balance sheet, with $8 billion in total debt reported as of December 2024. The offering will be made to qualified institutional buyers under Rule 144A and to non-U.S. persons under Regulation S, and will be guaranteed on a senior unsecured basis by certain wholly owned subsidiaries.
Analysts have generally remained constructive on CoreWeave’s near-term outlook despite the capital structure concerns. “From a numbers perspective, we are expecting another double-digit beat, with current consensus assuming 10% q/q growth, which feels conservative given the ongoing Microsoft (NASDAQ:MSFT) B200 ramp management spoke to last quarter,” noted Barclays (LON:BARC) analyst Raimo Lenschow.
Still, the company’s aggressive expansion strategy, centered on massive investment in GPU infrastructure, has come at a cost, with elevated interest burdens raising flags about cash flow resiliency in a cyclical market. CoreWeave issued $2 billion in new notes in May and follows that just two months later with this $1.5 billion issuance, moves that could signal a need to refinance rather than organic deleveraging.
Since debuting in public markets in late March, CoreWeave’s has proven an AI darling, initially spiking from $40 to $187 before stabilizing in the $125 to $140 range. Lenschow’s updated price target of $140 reflects both expectations for sustained customer demand in AI cloud services and the limitations posed by valuation, which he described as “full (~50x CY26E EV/EBIT).”
CoreWeave’s differentiated infrastructure, reportedly offering up to 35 times faster and 80% cheaper computing compared to AWS or Google (NASDAQ:GOOGL) Cloud, has positioned it as a leader in the AI acceleration space. However, the company’s reliance on debt to fund its buildout raises long-term questions, particularly if hyperscaler spending slows or AI workload monetization falls short.
Moody’s assigned a B1 rating to CoreWeave’s newly announced $1.5 billion senior unsecured notes due 2031, while maintaining its Ba3 corporate family rating and a stable outlook. Fitch similarly rated the notes at BB- with a Recovery Rating of ’RR4’, noting CoreWeave’s strong revenue visibility, capital discipline, and projected deleveraging, supported by a $25.9 billion backlog and robust EBITDA growth through 2026.
Both agencies cited CoreWeave’s relatively high leverage and customer concentration as key concerns. Nonetheless, Moody’s and Fitch highlighted the stability of CoreWeave’s contracted revenues, its unique competitive positioning in AI infrastructure, and the potential for leverage to decline to 3.5x or below by the end of 2026, provided the company continues its execution pace and maintains liquidity.
Revenue for the second quarter is forecast at around $1.2 billion, potentially exceeding consensus estimates and supporting EBITDA momentum. “In all, we think Q2 should provide proof points of ongoing healthy end-demand, though we still view valuation as full... and think the end of the lock-up two days after earnings limits any potential positive price action,” said Lenschow.