CoreWeave beat forecasts, then said it won't borrow from bond investors at today's rates

CoreWeave gave investors the numbers they wanted on Tuesday. Then it told them how it would avoid the market that had been pricing it for trouble. The AI cloud company, which rents Nvidia chips to OpenAI and other AI developers, said it will not sell new unsecured bonds at current yields. It will lean on loans backed by its equipment and on cash its customers pay upfront.

Stock investors cheered. Shares jumped more than 15% before the market opened Wednesday, according to TradingKey and The Motley Fool, after falling more than 40% over the previous month. For anyone weighing AI infrastructure as an investment, the more useful signal is the funding plan. It shows what a fast-growing, heavily indebted AI cloud provider does after the market yield on its bonds has touched 15%.

A clean beat on sales, a wider loss on the bottom line

Revenue for the quarter ending September 30 was $3.66 billion, up 168% from a year earlier, according to the company's filing. That topped the $3.56 billion analysts expected, per Bloomberg data cited by Yahoo Finance. The loss per share of $1.27 was also narrower than forecast.

CoreWeave raised its 2026 revenue forecast to $13 billion to $13.3 billion. Its backlog, meaning revenue it expects from signed contracts, reached about $132.5 billion. That was up from roughly $104 billion at the end of June. The company notes the figure depends on it delivering the promised computing capacity.

Below the revenue line, the picture is harder. Operating income was $207 million. Net interest expense was $846 million, up from $310 million a year earlier. The net loss widened to $709 million from $110 million. The company guided fourth-quarter interest costs to $1.05 billion to $1.15 billion, more than its entire third-quarter adjusted operating profit of $379 million.

Total debt reached about $46.9 billion, up from roughly $35 billion three months earlier, based on balance-sheet figures reported by Seoul Economic Daily and in the filing. Capital spending was about $14.5 billion in the quarter, with some pulled forward from the fourth quarter. The full-year spending forecast is $37 billion to $39 billion. Management expects to reach adjusted net income in the first half of 2028.

Why CoreWeave is stepping around the bond market

CoreWeave's existing unsecured bonds carry a fixed 9.625% interest rate. As anxiety about AI debt grew in October, their market yield climbed as high as 15%, Seoul Economic Daily reported. That is a rough guide to what new unsecured borrowing would cost it now.

Chief executive Michael Intrator said the company will not use that market "at current yields, nor do we need to," according to the call transcript. Instead, its next delayed-draw term loan is expected to carry a yield of about 7% to 7.5%. A delayed-draw term loan is a credit line the company taps as it buys equipment. This one would finance more than 90% of the related spending, management said. Its average cost of debt is 7.9%, down 2.5 percentage points from a year earlier.

The second leg is customer cash. CoreWeave expects about $9 billion in prepayments and deposits over the next three months. More than $3 billion of that is tied to re-signing contracts on equipment whose debt it has already paid off, executives said on the call. Customers have funded prepayments on 70% of its deals this year, executives said. The finance chief expects to raise less than $5 billion of new capital at the parent company level through 2027.

The approach is cheaper, but it has trade-offs. Loans backed by specific chips and contracts tie up those assets as collateral. The company also set up a program to sell up to 35 million new shares over time, which would dilute existing holders. It raised about $4.2 billion from convertible notes, debt that can turn into stock, during the quarter.

What investors still have to take on trust

The calm depends on a few claims that cannot yet be checked from outside. Management said qualified demand is about ten times its available capacity through 2027. It also said it is largely sold out through 2027 but has not yet offered 2028 capacity for sale. Management also pointed to possible revenue from renewing older chip contracts in 2027 and 2028, which sits outside the current backlog, according to a Yahoo Finance summary of the call.

Analysts were not uniformly reassured. UBS analyst Karl Keirstead cut his price target to $105 from $120 and called rebuilding investor confidence a "multi-quarter fix," TradingKey reported. Before the results, Morgan Stanley had cut its target to $70, TechTimes noted. Even after the jump, the stock sits roughly 60% below its 52-week high of $138.25, based on TradingKey's figures.

The wider interest-rate backdrop is also turning against borrowers. US core inflation came in hotter than expected for October, and futures markets now treat a Federal Reserve rate increase in December as nearly certain, Reuters reported. Higher benchmark rates raise the cost of every new loan, secured or not.

For buyers of AI computing, CoreWeave's quarter suggests capacity remains tight, and customers are paying earlier to secure it. For investors, the takeaway is narrower. CoreWeave has found cheaper money than its bonds imply, but only by pledging its chips and its customers' cash. Its interest bill is still larger than its operating profit, and it is guided to rise again next quarter.