"Yikes": One Word from Elon Musk Erased Tens of Billions
CoreWeave stock plunged about 15% after Elon Musk responded with the word "Yikes" to a tweet from an investor warning about a credit bubble in the AI sector. CoreWeave's bond yield surged to around 15%, indicating investor concerns over the debt levels of AI infrastructure companies. Shares of Nebius and Oracle also fell.
CoreWeave, an AI infrastructure company, saw its stock plummet more than 15% in Wall Street trading on Wednesday after Elon Musk responded with the word "Yikes" to a tweet from investor Chamath Palihapitiya. Palihapitiya posted a chart showing a surge in CoreWeave's unsecured bond yield to 14.5%, warning of a credit bubble in the AI sector. The bond yield, amounting to $1.25 billion and maturing in 2032, reached about 15% during the day. Musk's one-word response garnered significant attention. The sharp declines also affected other stocks in the sector: Nebius fell about 10% and Oracle lost about 7%. The declines continue a negative trend amid investor concerns over the massive capital raises in the field and whether the enormous investments in AI infrastructure will yield sufficient returns. Companies like CoreWeave and Nebius provide computing and cloud services to AI companies, leasing processing power based on Nvidia chips. To expand, they invest huge sums in purchasing chips and building infrastructure, with a significant portion of investments financed through debt. A high bond yield indicates significant concern in the credit market and a potential increase in the cost of future debt raises.