CoreWeave Stock at Risk of Falling Below $50 as AI Bubble Index Jumps to 74

CoreWeave (NASDAQ:CRWV) stock extended its steep downward trend, falling to its lowest level since May last year. It dropped to $54.25, nearly 70% below its all-time high, and the sell-off may continue as the AI Stock Bubble Index climbs to 74.

AI Stock Bubble Index Has Hit 74

There are signs that we are in an AI bubble. The AI Stock Bubble Index has trended steadily higher this year and now stands in the extreme zone at 74. This reading suggests that infrastructure spending and valuations are running ahead of disclosed revenue.

The index’s rise has happened at a time when some analysts are warning of the bubble. Ray Dalio has warned that it may burst because of rising interest rates, while Ken Griffin compared it to the dot-com bubble. 

Neocloud companies like CoreWeave, IREN, Nebius, and The RUM Group are at a significant risk if the bubble bursts. In a recent note, Gartner (NYSE:IT) said that these companies are at a bigger risk than hyperscalers. It warned that over $3.5 trillion of AI infrastructure spending could be exposed to impairment by the end of 2030.

These fears explain why CoreWeave’s stock has tumbled, and its short interest has risen to 15%. Its bond yields have also kept climbing, with the notes maturing in 2031 now yielding 15%. Total debt has jumped to nearly $30 billion, and capital expenditure is expected to remain substantially high.

Another risk is that the neocloud industry is being highly competitive. Virtually all Bitcoin mining companies have expanded into the sector. RUM Group (NASDAQ:RUM), formerly known as Rumble, has expanded into the industry by buying Northern Data. 

SpaceX (NASDAQ:SPCX) has received orders from companies like Google and Anthropic. Meta Platforms (NASDAQ:META) has also expanded to the industry, while many private companies like Lambda, Nscale, and Firmus are gaining market share. 

CoreWeave Stock is at Risk of Falling Below $50

The daily chart shows that the CRWV shares have continued falling in the past few months. It has dropped below the important support level of $64, which was the neckline of the head-and-shoulders pattern. 

The stock has dropped below the 50-day moving average and the Strong, Pivot reverse of the Murrey Math Lines tool at $75. It has remained below the Supertrend indicator. 

Therefore, the stock will likely continue falling, potentially to Murrey Math Lines’ Ultimate Support level of $50. A drop below that level will point to more downside towards the oversold level of $37.5. 

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