The race to build artificial intelligence (AI) has turned data centers into one of the hottest trades on Wall Street. It has also loaded some of the companies behind it with heavy debt, and t
The race to build artificial intelligence (AI) has turned data centers into one of the hottest trades on Wall Street.
It has also loaded some of the companies behind it with heavy debt, and that worry hit CoreWeave hard this week.
CoreWeave (CRWV) rents out computing power built on Nvidia chips to AI developers. Companies like it are often called “neoclouds,” newer cloud providers focused on AI work.
CoreWeave’s shares fell more than 15% on Oct. 14 and closed at $65.78. They slid about 6% more in premarket trading the next day. At press time, the stock was trading at $64.54.
But Deutsche Bank says, don't panic.
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The German lender kept its buy rating and $150 price target on the stock.
A price target is where an analyst expects a stock to trade, usually within 12 months. The target implies roughly 128% upside from Wednesday’s close.
The bank found little evidence that CoreWeave’s underlying business has weakened enough to justify the drop.
It pointed to steady demand for AI infrastructure and CoreWeave’s ties with Nvidia, Dell, Meta and OpenAI.
CoreWeave is loss-making and carries about $50 billion in debt, Reuters reports. The yield on its bonds due 2031 rose above 16%.
A bond’s yield is the return investors demand for holding it, and at that level it usually signals distress.
Credit default swaps work like insurance in case a borrower can't pay its debts. They now suggest a nearly 63% chance of default within five years. To put in context, that figure was about 30% just a year ago.
Critics argue that neoclouds borrow heavily to buy chips that lose value as newer models arrive.
In August, CoreWeave lifted its 2026 capital spending forecast to $35 billion–$39 billion. CFO Nitin Agrawal said on the company’s earnings call that the company plans to deliver more capacity to customers this year.
The selloff also comes as chip stocks broadly retreat.
The Philadelphia Semiconductor Index lost more than $1.6 trillion in market value over six sessions.
For now, Deutsche Bank sees the drop as a possible chance to buy. The bond market is pricing in far more risk, and the gap between the two is what investors will be watching.
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