The market value evaporated by more than $10 billion in four trading days, CoreWeave (CRWV.US) debt risk triggered a sell-off, but Deutsche Bank saw it as a good buying opportunity

The Zhitong Finance App learned that artificial intelligence (AI) cloud computing service provider CoreWeave (CRWV.US) suffered a double stock and debt loss this week. The market value evaporated by more than $10 billion in just four trading days, reflecting investors' concerns about deteriorating credit conditions and the high debt expansion model. However, Deutsche Bank believes that the recent market sell-off lacked sufficient support from the company's fundamentals, and the sharp correction in stock prices has instead created buying opportunities for investors.

In early Thursday trading, CoreWeave shares fell 9.5%, but all losses were erased at the close and closed up 5.94%. At the same time, indicators measuring the company's credit risk climbed to the highest level in history, and the price of its high-yield bonds fell further. Previously, CoreWeave bonds fell to a price level commonly viewed as the issuer in financial distress on Wednesday, raising market concerns about the company's solvency and future financing prospects.

However, Deutsche Bank analyst Brad Zelnick said in a report to clients on Thursday that although multiple factors combined to cause CoreWeave stocks and bonds to experience a sharp sell-off in the past week, it was difficult for the bank to find company-specific factors that could explain such drastic adjustments.

Zelnick pointed out that current market pricing overlooks CoreWeave's high-quality customer base, proven ability to execute business, turn backlog orders into revenue, and leading-edge infrastructure performance. He believes that these fundamental advantages have not fundamentally changed due to recent credit market fluctuations, so he maintains a “buy” rating for CoreWeave shares.

Regarding the financing issue that the market is most concerned about, Deutsche Bank acknowledged that CoreWeave will still need to raise more capital in the future to support the construction of AI data centers and related infrastructure. However, the bank believes that the company has a large backlog of customer orders, which can support subsequent financing, and that additional capital can be raised gradually at a relatively stable pace, which does not mean that CoreWeave must complete large-scale financing in a short period of time.

According to Deutsche Bank, the market may have overmagnified CoreWeave's financing risks, yet underestimated the support provided by its existing customer contracts and business execution capabilities.

Notably, Nvidia (NVDA.US) CEO Hwang In-hoon publicly expressed confidence in CoreWeave's financial situation on Thursday. Hwang In-hoon said that CoreWeave's financial strength is constantly being strengthened, and financing costs are actually falling. At the same time, he stressed that at present, Nvidia does not think it is necessary to provide additional financial guarantees for CoreWeave because the company's strength continues to improve.

As an important GPU supplier and shareholder of CoreWeave, Nvidia is closely linked to the company's business development. Hwang In-hoon's statement is also seen as a response to the market's recent credit risk concerns.

However, Hwang In-hoon's optimistic judgment on CoreWeave's financing situation is in stark contrast to the signals released by the bond and credit derivatives markets. As CoreWeave's credit risk index rises to an all-time high, bond investors are demanding higher risk compensation, reflecting clear differences in the market's ability to finance long-term.

In addition to CoreWeave's own financing issues, market concerns about the sustainability of the overall AI infrastructure investment boom are also heating up.

Research firm Gartner recently warned that the current AI infrastructure construction speed may have exceeded the level that relevant business revenue can support, leading to the risk that large investments will not fully recover costs in the future. Gartner estimates that by 2030, more than $3.5 trillion in AI-related spending could be at risk of asset depreciation.

The agency believes that as AI computing power infrastructure continues to expand, the industry will face challenges such as rising cost pressure, insufficient service differentiation, and increased competition. Notably, Gartner predicts that by 2030, more than 80% of emerging AI cloud service providers will not be able to continue to operate as standalone businesses.

This means that the AI cloud computing industry may experience large-scale integration in the next few years, and some companies may be acquired, merged, or withdrawn from independent operations due to competition and financial pressure. Gartner pointed out that for companies whose business models are highly dependent on computing power requirements, such as CoreWeave and Nebius (NBIS.US), the associated risks are particularly prominent.

Unlike large technology companies with diversified businesses and stable cash flow, the revenue growth of these emerging AI cloud computing service providers is directly related to data center computing power demand, so they are more susceptible to changes in computing power prices, infrastructure utilization, and financing costs.

CoreWeave's recent stock and debt sell-off highlights investors' re-examination of AI infrastructure investment logic.

On the one hand, demand for AI model training and inference continues to grow, providing specialized cloud computing service providers with opportunities to expand their business scale. CoreWeave has large customers and a considerable backlog of orders. Deutsche Bank believes these advantages are sufficient to support the company's future financing and growth. On the other hand, the construction of AI data centers requires continuous investment of huge amounts of capital, and uncertainty about debt financing costs, competition in computing power services, and returns on infrastructure investment have also caused the market to question the long-term profitability of some emerging cloud computing companies.

As a result, the views of Deutsche Bank and Gartner stand in stark contrast. The former believes that the recent decline in CoreWeave's stock price has exceeded the extent that fundamentals can explain, and is an investment opportunity worth grasping; the latter warns that the entire emerging AI cloud computing industry may face profound pressure to adjust and integrate its business model.

As CoreWeave's credit risk index continues to rise, investors will now focus on whether the company can obtain additional financing at a reasonable cost, turn customer backlog orders into actual revenue, and whether the growing demand for AI computing power can bring sufficient returns on large-scale infrastructure investments.

For CoreWeave, whether the stock price can stabilize in the future depends not only on whether AI demand continues to be strong, but also on whether the company can prove that its high-capital investment growth model is sustainable in the long term.