CoreWeave Is Imploding — And Taking AI Stocks Down With It

CoreWeave

Across the shows: 13 speakers in other episodes, 2 bullish and 13 bearish calls, past 30 days

• Paul Kedrosky · SK VenturesBearish

  CoreWeave's debt burden and rising borrowing costs point to a likely debt restructuring, not a full repayment.

  CoreWeave is among the most indebted neoclouds, and its debt must be refinanced or paid from token sales to renters of its compute. Both paths are harder as its borrowing costs and spreads widen, creating a debt spiral. The bond market is pricing this in: with the debt trading around 80 cents on the dollar, the market is signalling a significant chance it will not be repaid in full, and that the debt gets restructured rather than paid at par. The CEO's claim that the market is irrational and that the problems are not company-specific is, in Kedrosky's view, standard company messaging; the stress is specific to the most indebted neoclouds because of the twin pressures of higher debt costs and higher servicing costs.

  “So I see instead a world where at best, you have fairly radical restructuring of their debt obligations, which is what the markets are telling you”at 8:57

NVIDIA

Across the shows: 32 speakers in other episodes, 25 bullish and 9 bearish calls, past 30 days

• Paul Kedrosky · SK VenturesNeutral

  Nvidia is unlikely to rescue CoreWeave, since backstopping the neocloud cascade is too large an obligation.

  Asked whether Nvidia's roughly $2 billion investment and compute commitments make a bailout likely, Kedrosky says no. He calls the idea a classic speculative assumption that requires granting something implausible: that Nvidia would decide to own and restructure a neocloud. Even if Nvidia tried to stop the first failure, the market would test its commitment, and it would then have to backstop an expanding list of companies. Nvidia would then have to conclude that it cannot bail out the system.

  “The problem is the scale of the obligations once the dominoes start falling... I'm not Hank Paulson, and I'm not the Federal Reserve. I'm not in the business of bailing out the system.”at 12:46

Anthropic

Across the shows: 36 speakers in other episodes, 17 bullish and 37 bearish calls, past 30 days

• Paul Kedrosky · SK VenturesBearish

  Anthropic's revenue looks highly concentrated in about eight customers, and coding demand may be peaking.

  Ahead of Anthropic's pre-IPO investor disclosures, Kedrosky says he cares about two numbers. The first is customer concentration: he has a strong sense that more than 80% of revenue comes from perhaps eight companies, which would be unprecedented. The second is the coding business. His hunch, backed by recent data, is that the coding frenzy that drove initial adoption is at its tail end, so future growth would have to come from markets that look nothing like coding. He expects the rest of the disclosures to be routine earnings-style detail.

  “I want to see what's happening with respect to the coding aspect of that, because my hunch is, and we've seen this in recent data, that we're really at the other end of this coding frenzy that drove the initial adoption”at 16:37

AI bubble & tech valuations

• Paul Kedrosky · SK Ventures

  Expects a significant AI-related market correction by the first half of next year, possibly sooner.

  Kedrosky expects a pretty significant correction in AI-linked markets, driven by the CoreWeave debt stress and the broader bubble in private valuations. He has been saying it could come between now and the second quarter of next year, and he aligns with Paul Tudor Jones's similar call, placing it in the first half of the year. He says it could come sooner. The timing is hard to pin down, but his expectation is that the triggers are already in place.

  “I've been saying sometime between now and the first second first, second quarter of next year... So I'll go with Paul and say the first half of the year, but I think it could be sooner.”at 13:46

• Paul Kedrosky · SK Ventures

  A bubble exists; private AI valuations already exceed the 2000 Nasdaq peak, and private markets are where the risk sits.

  Kedrosky rejects the argument that there is no bubble because public price-earnings multiples are far below the dot-com era. The bubble sits in private markets, which he says have become the new public markets. Combined, the private valuations of OpenAI and Anthropic already exceed the peak Nasdaq valuation before its 2000 crash, and that will be more evident as they list. Public investors are looking for the bubble in public multiples when it is already in private ones. He also says the bubble is not only in private names, with some public stocks far above fundamentals.

  “the valuation of [OpenAI] and Anthropic alone combined in the private markets and what we're likely to see as they come public is already more than the peak Nasdaq valuation when it crashed in 2000.”at 14:19

US Treasuries & yields

• Paul Kedrosky · SK Ventures

  AI capex fundraising has pushed up 10-year Treasury yields, which in turn makes neocloud borrowing harder.

  Kedrosky describes a feedback loop. AI capex fundraising has squeezed mid-duration Treasuries such as the 10-year, which he calls unprecedented. The reverse is also true: as 10-year and equivalent-duration Treasury yields rise and become more attractive, highly indebted neoclouds find it harder to raise money. The result is that both sides have heavier debt burdens and higher interest costs.

  “fundraising among the AI CapEx fundraising has squeezed sort of the mid duration treasuries, the ten years for example, which is incredible and has never really happened before.”at 5:39

AI pricing & unit economics

• Paul Kedrosky · SK Ventures

  Token prices falling about 13x a year forces neoclouds to double token sales every ninety days to stand still.

  Citing an Epic AI report, Kedrosky says the cost of tokens has fallen roughly 13-fold a year for four years. Neocloud revenue is price times volume, and debt has to be serviced from that revenue. With price falling this fast, a provider must grow token volume enormously just to keep revenue flat. He translates this to doubling token sales every ninety days. Combined with rising rates and spreads, this makes servicing debt astronomically harder for indebted neoclouds.

  “So, Epic had a report out... we've had, for the last four years, roughly a 13 fold annual decrease in the cost of tokens. So doing the math, it's pretty straightforward, it's price times volume”at 7:11

International equities

• Paul Kedrosky · SK Ventures

  China's public AI stock boom is building its own bubble, rippling alongside US private AI valuations.

  Kedrosky calls China the one exception to the rule that AI speculation sits in private markets. China now has around 880 publicly listed AI-related companies, up from zero two years ago, with a combined market cap of about $3 trillion. He describes the public AI boom in China and the private boom in the US as waves that will crash together, bringing each other down and wiping out about $6 trillion of what he calls nonsensical market value.

  “the only exception to that rule broadly is China, where something now, there's something like eight eighty [880] AI ... public companies that are AI related now, up from zero two years ago, with a combined market cap of something like 3,000,000,000,000.”at 15:05

US inflation

• Mark Zandi · Moody's Analytics

  The Iran war is driving inflation through energy costs and pass-through, with tariffs and immigration policy adding pressure.

  Zandi says September's inflation of 3.7% is uncomfortably high, and the Iran war is the main driver. Higher energy and fuel costs flow directly from the war and pass through into the rest of the economy, feeding broader price pressures. Tariffs and immigration policy also add to inflation, but the war is the dominant force.

  “The Iran war's fingerprints are all over it. Obviously, the higher energy fuel costs go directly to the war. And there's a lot of pass through going on into the rest of the economy”at 21:45

Tariffs & trade policy

• Mark Zandi · Moody's Analytics

  Tariffs and immigration policy were always going to slow growth and raise inflation, as economists expected.

  Zandi says the current inflation outcome is not surprising. Before the April 2025 tariffs, he and most economists expected them to lead to slower growth and higher inflation. Immigration policy had the same effect, with slower growth and higher inflation. The Iran war fits the same pattern. The current state of the economy is the predictable result of these policies combined with the war.

  “economists said, like me and almost everybody else, ... that tariffs are gonna lead to slower growth and higher inflation. Then the immigration policy, same deal, slower growth, higher inflation.”at 23:06

US jobs & labor market

• Mark Zandi · Moody's Analytics

  Real wages are falling as inflation outpaces nominal pay growth, so the labor market is soft, not at full employment.

  Inflation is now consistently above wage growth, so purchasing power is declining. Zandi argues that if nominal wage growth, adjusted for inflation, is slowing, the labor market must be soft. With unemployment at 4.2%, he says the economy is not at full employment, which is a weaker position than the headline unemployment rate suggests.

  “if nominal wage growth that's, you know, with inflation considered, is decelerating, that means that the labor market is on the soft side if we're not operating at full employment.”at 23:38

US consumer

• Mark Zandi · Moody's Analytics

  Spending is driven by stockholders; with real incomes falling and saving low, consumers will bend if stocks stall.

  Zandi describes a K-shaped economy. Spending is led by well-to-do households that own stocks, and total US stock wealth roughly doubled in four years, from $35 trillion to $70 trillion, since ChatGPT launched. Roughly two-thirds of Americans own little stock or do not own their homes, and they are hanging on while real purchasing power declines. With saving rates near their lows, he expects the consumer to bend, especially if the stock market stops rising.

  “So it feels like, you know, the consumer is gonna show, you know, a bit of a bend here, particularly if the stock market doesn't continue to move north.”at 25:30

Middle East & Iran

• Mark Zandi · Moody's Analytics

  The Iran war costs the average US household about $2,000 so far, a conservative estimate.

  Zandi's estimate has three parts. The largest is higher energy costs, including gasoline, diesel, jet fuel and home heating. The second is higher interest rates: the 10-year Treasury yield was below 4% before the war began in late February and is now about 5.25%, which he attributes largely to the war. The third is military spending drawn from the Pentagon's instruments, paid by taxpayers. He says indirect costs such as higher fertilizer prices, which will feed into groceries, and higher helium prices, which raise semiconductor and electronics costs, are not included, so $2,000 per household is a conservative figure.

  “we just hit $2,000 in extra costs related to the war, and that breaks down into three, broadly three things.”at 25:54

US rates & the Fed

• Mark Zandi · Moody's Analytics

  Raising rates won't solve war-driven inflation; the Fed should focus on the labor market, and he'd dissent.

  Markets price close to a 50-50 chance of a Fed hike in October and a hike by December if not October. Zandi says the Fed is trying to stop war-driven inflation from becoming entrenched, but he argues the labor market deserves more weight, and he does not see how higher rates address inflation caused by the Iran war. He says he would probably dissent on the committee. Rate increases are the wrong tool here given the war-driven supply shock.

  “I'd be more focused and put... At least put more weight on what's going on in the labor market going back to full employment. ... I don't quite understand how raising rates is gonna solve the problems of inflation created by the Iran war.”at 29:03

US growth & recession risk

• Mark Zandi · Moody's Analytics

  Despite strong headline numbers, the US economy is highly vulnerable and fragile.

  Headline GDP, unemployment and the stock market look fine, but Zandi argues that real purchasing power is declining, which is hard to square with a healthy economy. Layoffs are low, which avoids a recession, but once people lose jobs they struggle to re-enter the labor market. House prices have been flat for three to four years, which matters because most Americans rely on their homes rather than stocks. These factors make the economy fragile.

  “Well, it feels very vulnerable to me... just despite that, feels highly vulnerable, very fragile, I think would be the right word.”at 30:19