--- title: CoreWeave in a Coal Mine? No Contagion, Yet description: "The Point #53: CoreWeave's bonds went from par to a 15% yield, yet high grade and high yield credit have still outperformed Treasuries this year. No contagion, yet." --- [Skip to content](https://thepoint.ciogroup.com/episode/53#main-content) [![The Point logo](https://thepoint.ciogroup.com/hs-fs/hubfs/ThePoint_logo_WHITE-nav.png?width=150&height=50&name=ThePoint_logo_WHITE-nav.png)](https://ciogroup.com/) Open main navigation Close main navigation [All posts](https://thepoint.ciogroup.com/episode/all) October 15, 2026 # CoreWeave in a Coal Mine? No Contagion, Yet By  Steven Wieting & David Bailin  ·  3 minute read [Download PDF](https://thepoint.ciogroup.com/hubfs/The%20Point%20EP53.pdf) [All Episodes](https://thepoint.ciogroup.com/home) CoreWeave delivered a preview of possible bond market turmoil yet to come. Bond investors panicked after comments from its co-founder, who reportedly said it would seek an investment-grade credit rating so it could access “unlimited” pools of capital. The deafness of the comment was startling. “Unlimited borrowing” sounds like the road to ruin for existing debt holders. CoreWeave’s primary debt offerings in public and private markets carried 9% coupons at issue and traded at par as recently as June 30. Last week, sellers had to offer a 15% yield to find buyers, and there weren’t many. ## It’s More Than Size, It’s Profitability CoreWeave owes $52 billion (gross) for its data center investments to date. In contrast, the top five cloud services/data center builders, all diversified public companies, owe $770 billion. Perhaps you are wondering if this is too much. A single year of EBITDA for the group is $651 billion. Their EBITDA in the coming two years could pay down much of their direct debt – though this excludes their substantial off-balance-sheet obligations. With a combined equity market cap of $13.2 trillion, there was no contagion from CoreWeave to the strongest borrowers last week (Figure 1). Even after CoreWeave’s bond blowup, both high-grade corporate and high-yield bonds have still outperformed US Treasuries this year (Figure 2). ![Figure 1: CoreWeave, Oracle, Alphabet and Microsoft 5-Year CDS. Source: CIO Group, Bloomberg](https://thepoint.ciogroup.com/hubfs/243932535/EP%2053%20-%20FIG%201.png) ![Figure 2: US Corporate High Yield, High Grade and Long-Term US Treasury ETF Price Performance. Source: CIO Group, Financial Modeling Prep](https://thepoint.ciogroup.com/hubfs/243932535/EP%2053%20-%20FIG%202.png) The present pace of the AI infrastructure investment spending boom is unsustainable. Difficulties with debt funding have been predicted for quite some time (see [our Point last week](https://thepoint.ciogroup.com/episode/52)). Yet the growth in AI demand is outstripping supply. Computing components, energy, water, land and now credit will constrain the growth of data center capacity. If data center development slows – as the CoreWeave episode suggests – it could very plausibly improve the economics for CoreWeave’s competitors. ## Good and Bad News in Parallel The market reaction to CoreWeave seems emblematic of a burgeoning confidence crisis in AI investing. Yet, it is potentially a welcome restraint that may avert a bigger future crisis. As figure 3 shows, the current period stands in notable contrast to the peak of the internet boom. Quite simply, today’s total corporate debt growth is half the pace of 1999. The Nasdaq Composite has risen 16% over the past 12 months. In 1999, that figure was +86%. This suggests that risk-taking now is high, but not absurdly so. ![Figure 3: US Non-Financial Business Credit Growth (Black, Left) vs Nasdaq Y/Y% (Blue, Right). Source: CIO Group, Haver Analytics](https://thepoint.ciogroup.com/hubfs/243932535/EP%2053%20-%20FIG%203.png) ## Sorting Out Winners and Losers A slowdown in data center investment growth will not materially slow AI innovation and AI utilization. Markets believe new memory supply from China is likely to help rebalance supply and demand for memory chips. Corrective forces in the DRAM boom have resumed (Figure 4). Yet, actual AI data service providers (Anthropic is one) and critical beneficiaries such as cybersecurity and cloud services should be assessed independently. CIO Group continues to favor software and cloud services over tech hardware (Figure 5). ![Figure 4: NVIDIA vs Micron and Hynix (Cutting-Edge Processors vs Memory Chips). Source: CIO Group, Bloomberg](https://thepoint.ciogroup.com/hubfs/243932535/EP%2053%20-%20FIG%204.png) ![Figure 5: S&P Software and Services Share Prices, EPS Y/Y% With Estimates. Source: CIO Group, Haver Analytics, Bloomberg](https://thepoint.ciogroup.com/hubfs/243932535/EP%2053%20-%20FIG%205.png) Today, the data-center-only providers and the hyperscalers are claiming higher spending intentions for the year ahead. But CoreWeave is the market’s shot across those ambitions. ## Now, Keep Your Eyes on Warsh As we’ve noted recently, the Fed’s new chair, Kevin Warsh, has an “unforgiving” approach to managing supply shocks. He believes that higher rates are needed to temper inflation whether monetary or shock-driven. (See Points [#49](https://thepoint.ciogroup.com/episode/49) and [#50](https://thepoint.ciogroup.com/episode/50).) Therefore, how much US monetary tightening is ahead truly can’t be known given the unpredictable nature of shocks. Today, there seems more fear over the CoreWeave episode than fundamentally warranted over the debt outlook for the stronger hyperscalers.  Yet the Fed will interact with credit markets as risk-free rates climb. That is why investor portfolios should be strong and diverse enough to withstand a far more substantial credit event. ![Figure 6: High Yield Credit Spread Over US Treasury (pts). Source: CIO Group, Haver Analytics](https://thepoint.ciogroup.com/hubfs/243932535/EP%2053%20-%20FIG%206.png) ## Important Information This material has been prepared by CIO Capital Group, LLC (“CIO Group”) for informational purposes only and does not constitute investment advice or an offer to buy or sell any security or the solicitation of an offer to buy any security or investment advisory service. All opinions are subject to change without notice. Past performance is not indicative of future results. Investment returns may vary significantly over time. Indexes are unmanaged, are not available for direct investment, and do not reflect the deduction of fees or expenses. This material has been prepared without regard to the specific investment objectives, financial situation, or particular needs of any individual investor. CIO Group believes that the information obtained from third party sources contained herein is reliable, but no representation or warranty is made regarding its accuracy or completeness. CIO Group accepts no responsibility or liability (including for indirect, consequential, or incidental damages) for any error, omission, or inaccuracy in such information and for results obtained from its use. Certain information contained herein constitutes ‘forward-looking statements’ which are based on current expectations, estimates, projections, and beliefs. Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially. Any forecasts, projections, estimates, or market expectations are based on current assumption and should not be considered guarantees of future events or investment results. References to portfolio positioning, asset allocation, sectors, or investment strategies reflect CIO Group's views as of the date of publication and should not be interpreted as recommendations to purchase or sell any particular security or investment strategy. CIO Group is an investment adviser registered with the SEC. Copyright ©2026 CIO Group. All rights reserved. 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