The new AI cloud enters a period of differentiation: the financing model is the key, CoreWeave (CRWV.US) and IREN (IREN.US) are under pressure and Nebius (NBIS.US) is supported

The Zhitong Finance App learned that CoreWeave (CRWV.US) is becoming the epitome of long and short differences in AI transactions. Before the Friday market, the stock fell more than 5%, leading the decline in the new cloud vendor sector. IREN (IREN.US) and Nebius (NBIS.US) fell 0.2% and 0.8%, respectively. Earlier on Wednesday, CRWV had plummeted 15.5%. Foreign media reported that the price of its unsecured bonds due in 2032 fell below 80 cents per dollar. This level is widely regarded as the threshold for financial pressure. Credit default swap prices once showed that the market is betting that the probability of default over the next five years is over 60%.

This storm is not a one-sided story. On Thursday, CoreWeave's stock price rebounded and closed up 5.9%, the best single-day performance in more than a month. Nvidia CEO Wong In-hoon publicly expressed confidence. Deutsche Bank also called this round of sell-off a “buying opportunity.” Thomas Difazio, ETF strategist at Roundhill Financial, described the current market: “The macro background has created an environment where you sell first and ask why later. In the short term, it's hard to fool around and say that the alarm has been lifted.”

The debt financing model is facing interest rate headwinds

As a so-called “new cloud” provider, CoreWeave is at the core of AI infrastructure construction, but its data center expansion relies heavily on high-yield bond financing. As US bond yields rise and inflation persists, financing costs rise rapidly.

Morningstar warned that as competition for financing intensifies, new cloud operators may be forced to borrow at a higher cost. The agency stated in the report: “By 2027, total investment in cloud infrastructure will rise to over $1.3 trillion. We expect that new cloud operators will be forced to borrow at higher costs, which may put pressure on the balance sheets of companies adopting aggressive financing strategies.”

This round of sell-off stemmed from investors' concerns: CoreWeave heavily borrowed to expand AI data centers, continued to rise in capital requirements, and whether its solvency was steady as demand or financing conditions deteriorate.

In addition, hyperscale cloud vendors themselves are also seeking large amounts of capital to expand AI infrastructure, and have stronger credit conditions, which may further squeeze the financing space of new cloud operators. Morningstar lowered CoreWeave's target price from $115 to $108, IREN's target price from $43 to $37, and also lowered Oracle's target price from $220 to $195.

Segmentation within the sector: Nebius' differentiation path

Not all new cloud operators are under equal pressure. Morningstar pointed out that Nebius' balance sheet is stronger than its peers and has very little net debt. The company uses high stock valuations to raise capital through equity issuance and convertible securities, limiting its reliance on debt. Morningstar maintained its target price of $150, in contrast to CoreWeave and IREN's cuts.

This differentiation reveals a core problem in the AI infrastructure race: on extremely capital-intensive racetracks, financing structures rather than simply demand prospects are becoming a key variable in determining the fate of individual stocks. Brannin McBee, co-founder of CoreWeave, said the company aims to maintain high ratings, which highlights its plans to borrow more.

Industry research analyst Robert Schiffman believes that if market financing channels are tightened, CoreWeave's close relationship with Nvidia can provide a source of capital, but Wong In-hoon has clearly refuted the bailout claim, saying it is “unnecessary,” and emphasized that its cost of capital “is actually falling.”

The AI capital expenditure cycle is still early, but the trade-off has changed

Despite the risks posed by rising interest rates and excessive AI spending, Matt Bartolini, head of global research strategy at State Street Investment Management, believes that the fundamental background is still encouraging. “We're still in the very early stages of the AI capital expenditure cycle, so I don't think interest rates will be an insurmountable obstacle, but it does change the computational trade-off of continued debt issuance and whether debt financing can be matched by future credible growth.”

Retail sentiment also appears to be on the side of optimism. On Stocktwits, CoreWeave's retail sentiment rose from “bullish” to “extremely bullish,” with some traders believing that the decline provided a buying opportunity. IREN sentiment also rose to “extremely bullish,” while Nebius rose from “neutral” to “bullish.”

This tug-of-war around CoreWeave is essentially a microcosm of AI transactions moving from “storytelling” to the “settlement” stage. The long-standing narrative of demand for computing power surpassing supply has yet to break down, yet scrutiny of financing costs, debt structures, and return on capital is becoming more stringent than ever. For investors, AI beliefs are still important, but a stable balance sheet may be the key to overcoming fluctuations.