Wall Street Is Panicking Over CoreWeave - Is This the Buying Opportunity of 2026?

At the end of the second quarter, company reported 104.2 billion dollars in backlog compared to around 30 billion a year earlier. And since then, it also announced 25 billion more in additional commitments. Just think about how ridiculous that growth is. >> What's up everybody? It's LTDS here and welcome to Milkroad Stocks, a daily market show that kept begging for a dip to buy, finally got one, and is now way too scared to touch it. Today is October 15th, 2026, recording on October 14th. Is Coreweave about to go bankrupt? One of its bonds hit a 15% yield, and Elon replied, "Yikes." on X, and the stock has fallen dramatically in the last couple days, dragging every other Neo cloud down with it. And the strange part is that Coreweave's average borrowing cost has actually dropped since 2023 from 14.9 to 8.3 last quarter, and its backlog is still more than a hundred billion dollars. So today, Melvin, our leading portfolio manager, is going to do a solo pod. He's going to go deep into this one and explain what that 15% yield actually means, and why Jensen Huang naturally needs Neo clouds to succeed. At the end, he's also going to talk about what he's bought on today's dip. And if you want to see those trades, you want the cheat sheet, you can go straight to his portfolio in Milkroad Pro, which costs just a dollar at the link below. I'm not in this episode. He did it late at night by himself, and it's a fantastic show, so make sure you watch it through. Otherwise, enjoy it. >> Hey guys, what an absolutely brutal week this has been for the AI infrastructure trade. Neo clouds are selling off. Pretty much every high beta stock is currently getting destroyed. Uh CPI this morning came in hotter than expected. And on top of that, we had two straight days of flood coming out of China um surrounding the memory industry. And now, over the last two days, the entire conversation has shifted towards Coreweave and its borrowing costs, with bond yields briefly hitting 15%, and investors suddenly freaking out uh at possibility of possibility of a bankruptcy. Then, on top of that, today, this is October 14th. I'm recording this at 10:30 p.m. So, just a couple hours ago, Anthropic released their current revenue run rate for Q3. So, Anthropic roughly generated 16.8 billion. That's up 46% from 11.5 billion that they had in Q2. So, that's nearly 5.3 billion in additional, you know, revenue in in 3 months. And Anthropic also told investors it was profitable on an adjusted basis and cash flow positive during the quarter as well. So, I think we can safely assume that Anthropic's ARR is currently about $17 billion halfway through October, but the market does not seem to like this because currently, as of this recording, markets are down after hours. It's not I think it's not happy because the sell side was accepting expecting roughly $1.8 billion more, but that's okay. Now, we have Reuters reporting that Anthropic is projected to hit $110 billion by the end of the year. This is projecting from Anthropic itself. And this will be huge obviously for Anthropic if they can achieve this. And on top of that, Cosbee is currently being sold off as well because there's new reports out of Korea that there will be an oversupply of memory. Man, like I feel like the markets cannot catch a break right now. Don't worry about this cuz everything will be fine. I personally think so because we've been through this time and time again. Market just likes these the cool off moments to take a breather so it can run run higher. And also, I genuinely feel like we're waking up to another headline every day that's, you know, essentially sending the AI infrastructure sector lower. And uh a lot of these headlines are just way out of proportion. And now, don't get me wrong, there are legitimate concerns about like interest rates, debt, and how these companies are going to finance their massive infrastructure build-out. But I think the market is confusing financing concerns with a slowdown in actual AI demand, and those are very two different things. So, in today's episode, I want to focus on what's happening with Coreweave because I think this entire situation is misunderstood by a lot of investors. We're going to break down why Coreweave bond yields are suddenly at 15%. What that means for the company, how much debt it has, and whether its massive backlog is enough to support its future obligations. So, I also want to go through their financials and also explain why the bears are worried. And it's not just them, a lot of the Neo Clouds are caught up in this trade. You have Nebia's that are down like almost eight five to 8% today. You have Applied Digital, Cypher, you name it. Wi Fiber, everything got caught up. Even optical names got caught up. This was just a high beta broader sell-off. So, I want to come in here and explain what exactly is going on. So, let's start with Coreweave, right? I think the entire Coreweave situation is blown out of proportion. And we're seeing panic across like Neo's Neo Cloud sectors, right? Everything's affected by this. But what's interesting is that sell-off isn't necessarily happening because AI demand is slowing down. It's happening because investors are starting to get worried that how all of this AI infrastructure is going to get financed. And Coreweave has suddenly become the center of this conversation because if you look at this slide, Coreweave bond yields touched 15% to this was yesterday, then closed at a new high. For those who haven't been following what's happening, um CoreWeave dropped more than 15% to yesterday after investors started freaking out over the company bond yields, you know, touching 15%. Chamath posted it on X and Elon Musk commented saying yikes. And then suddenly everyone started talking about whether CoreWeave could potentially face bankruptcy. And I think genuinely a lot of people are misunderstanding what's what that 15% actually means. Now, don't get me wrong, CoreWeave absolutely has risk. I've talked about this company's debt situation before. That is one of the biggest things investors need to watch. And but but there's a pretty big difference between a company having expensive debt and a company suddenly being on the verge of bankruptcy. And I think that distinction is completely lost in the, you know, conversation. And also, as I mentioned before, Neo clouds started dropping left and right and even Nvidia was immune to the sell-off and the rest of the high beta names, as I mentioned, got sold off. I want you to understand why is this happening, right? These are companies operating in different parts of the AI infrastructure market, right? Like they have but they have one thing in common. They're all exposed directly or indirectly to the enormous amount of being money being spent, you know, building AI data centers. A lot of these companies are borrowing billions of dollars to secure power, buy GPUs, and construct the infrastructure needed to support AI model AI demand. And as long as financing is available at reasonable rates, that model works really well. But what happens when investors start demanding much higher returns to lend these companies money? That's where things get complicated, and that's exactly what we're seeing with CoreWeave right now. >> We're going to pause for a second. The AI trade is changing. The bottleneck stocks are either running out of steam or getting ready for another leg higher, while the application layer is finally starting to show some real profits. Our analysts were early to the last wave, and now they are buying for the next one. Catch your next call inside Milk Road Pro for just a dollar at the link below. >> And uh what's interesting is Another important factor is inflation, right? Like so September CPI came out this morning. It was hotter than expected with headline inflation re- inflation reaching 3.7 targets. And Wall Street already had higher inflation expectations, but it went tad bit higher than that. Um core inflation also drove, you know, slightly above expectations as well. And that pushed yields higher and added more uncertainty around the direction of interest rates. And this is something I've been talking about a for a while, right? Uh because when interest rates are rising, the market starts becoming much less forgiving towards companies that depend on outside financing to fund their growth. It doesn't matter if a company just signed another multi-billion-dollar AI contract. If investors are worried about how that company is going to finance a AI infrastructure needed to fulfill that contract, the stock can absolutely get destroyed, and that's the environment um we're dealing with right now. And also, like obviously the gas prices was the main cause of inflation because of the Iran war. So, and we all know that. Now, let's What does a 15-year-old 15% bond yield actually mean, right? Now, CoreWeave issued 1.25 billion worth of unsecured notes earlier this year with a 9.625 coupon. Essentially, investors lend Coreweave money and in exchange the company agreed to pay them at a fixed rate of 9.625. Pretty straightforward, right? But this is where things gets interesting. These bonds were originally sold at 100 cents on the dollar. Now, fast forward a few months, the market price of those bonds have fallen um below 80 cents. And because the bond is now trading at a large discount, the yield investors can earn by purchasing it at the current market price basically has increased significantly. So, at one point, the yield reached approximately 15%. Now, here's where I think a lot of people are getting wrong. Coreweave is not suddenly paying 15% on all of its debt. The company is still paying the agreed-upon coupon on those existing bonds. What changed is the return that investors are basically demanding to hold them now. For example, I'll give you a simple example. Imagine you lend a company $1,000 at a fixed interest rate of roughly 10%. The company now owes you $100 annually. Now, imagine if investors start becoming nervous and somebody is only willing to pay $800 to purchase those bonds from you. The company still owes the same interest payment, right? But the person buying that $800 bond, $800 value coupon, is getting a much higher potential return. And that's essentially what's happening here. Now, I don't really want to like dismiss as a a 15-year yield is absolute like is not concerning. It absolutely is because it means that investors are pricing in significantly more credit risk. And if CoreWeave needed to issue similar unsecured debt under those conditions, borrowing could become substantially more expensive. But that does not mean every existing loan suddenly gets repriced at 15%. That's exactly what I'm trying to say here. And now, one of the biggest misconceptions about CoreWeave is that the company finances all of it in infrastructure through the same type of debt. And that is simply not true. CoreWeave has access to several different financial structures. And the borrowing costs can vary dramatically depending on how these agreements are structured. For example, a company completed a 4.2 billion convertible financing in September with a coupon of just 2.875. That's a massive difference between 15% yield everyone's panic about panicking about right now. And now, convertible debt is different from traditional unsecured debt because investors receive this option to convert those holding into equity under, you know, certain conditions. We all know that. Now, it wouldn't be fair to compare those interest rate directly without considering the additional equity and potential dilution. But my point is here is that CoreWeave has more than one way to raise capital. And the company also secured financial backed by infrastructure like GPUs and customer contracts. And some of those loans have already received investment grade because lenders are evaluating the underlying collateral and contracted cash flows that they're receiving. For example, CoreWeave previously arranged an 8.5 billion package with Moody's A3 rating. So, think about what that tells us. Investors might be demanding 15% to own one type of, you know, Coreweave's unsecured bond, while financing backed by certain assets, contracts can much carry a much lower cost. That's what I'm trying to say here. And if you look at this slide this slide, this is uh a chart from Coreweave's own investor presentation, and I think this is everyone something everyone needs to pay attention to because it tells a whole different story than what we're hearing from the markets right now. Back in 2023, Coreweave's weighted average interest rate was sitting at an absolutely ridiculous 14.9%. By 2024, that dropped to 12.4%, and by the end of 2025, it had fallen to 9%. Now, fast forward to second quarter of 2026, and that number declined to 8.3. And on a pro forma basis, accounting for finance like additional financing, it was just 7.8%. So, while everyone is freaking about like one particular bond yield nearing 15%, Coreweave has actually been bringing down its own overall borrowing cost for years now. And what I find more interesting is that even back in 2023, Coreweave just had $1.6 billion in total debt, but by the second quarter of 2026 this year, that number has essentially climbed to 35.6 billion, and the pro forma figure was 38.6 billion. Now, we're talking about a company that has taken on tens of billions of dollars in additional debt while simultaneously reducing its average borrowing cost. Another thing you have to understand is that Coreweave currently has a backlog of more than $100 billion. At the end of the second quarter, company reported $104.2 billion compared to around $30 billion a year earlier. And since then, it also announced $25 billion more in additional commitments. Just think about how ridiculous that growth is. We are talking about a company that has managed to secure an enormous amount of future demand from some of the biggest technology companies of the world. Customers include Microsoft, OpenAI, Meta and these companies are not spending billions of dollars of AI infrastructure because they have nothing to do with like nothing better to do with their money. They're doing it because the amount of compute needed to train and run increasingly sophisticated AI models continues to grow. And here's something I think investors need to understand about the backlog. A backlog is not the same thing as obviously a cash sitting at the bank. Coreweave still has to, you know, construct the facilities, deploy the GPUs, and make the computing capacity available before it can, you know, recognize the the backlog. Now, we know that backlog is extremely important. I think we should talk about their revenue that they got in Q2. So, in Coreweave quarter revenue came in around $2.58 billion. That's more than $1.21 billion at the same time as last year. And company that's, you know, for a company of this size, that's pretty incredible growth. Because here's the problem. While the revenue has been growing rapidly, the interest rates also have been, you know, increasing significantly. Because in the second quarter, Coreweave reported approximately $640 billion interest expense compared to $267 billion a year earlier. And its net loss was approximately $626 million. So, the business is generating substantially more revenue, but it's also spending significantly more to fund that growth. And I think that's what investors are having a hard time, you know, with right now. Coreweave is essentially spending enormous amount of money upfront to build infrastructure that will generate revenue for several years. The company has to purchase GPUs, all the infrastructure, you name it. But, and you got to understand, those interest payments just don't disappear while you're waiting on those projects to come online. They're still due, and that's the pressure that Coreweave is under right now. Because in the first half of 2026, Coreweave spent approximately 14.1 billion in CapEx. And for the full year, management guided to $35 billion and $39 billion between that. Now, compare that with the projected full revenue of approximately 12.4 billion to 13.2 billion. And that's a pretty enormous difference, and it tells you that Coreweave is still very much in that investment phase of its expansion, and the company's obviously burning more money, but you have to understand, these infrastructure takes billions of dollars just to build out. Like 1 GW to build out is like 30 to 60 billion dollars, and if you wait for any longer, those numbers are only going to go higher. Why? Because of memory cost, because the amount of infrastructure that needs to get built, and the amount of optical connections it needs. Nvidia is constantly raising prices, so there's a lot of factors involved in this. 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And one of his biggest arguments was that markets is misunderstanding Core Weave's business. He also expressed that confidence that the company's backlog supports his debt obligation. Now, obviously, I wouldn't expect a CEO to come out and tell investors to panic, but I do think that one of the points he made is worth paying attention to. He suggested that, you know, concerns surrounding financing and, you know, debt races at other AI infrastructure companies are starting to affect how investors viewed Coreweave, especially with what happened in Australian IPO. That was supposed to get listed, that got pulled because of some concerns around their backlog and how much gigawatt that they contracted. Um and I think he's absolutely right about that part because this is something we've seen across the broader neo space, neo cloud space. Whenever one company runs into financing concerns, investors immediately start to question everyone else and that makes sense to a certain extent. These companies operate in operate in a very capital intensive industry and a lot of them, you know, rely on similar lenders, institutional investors and capital market, but I think like not all of them are built the same. I think that's what you have to understand and I I think that's why there is a broader neo cloud sell-off that's happening. Everything is just grouped into into together. Now, the bear case with Coreweave, right? We I already kind of mentioned this a little bit. First and foremost is their debt. We all know Coreweave has an enormous amount of debt. Interest expenses are already significant relative to their current profitability. The second risk is customer concentration. Coreweave has, you know, diversified a lot of their customers, but I you still have to understand a lot of the customers are just hyper scalers. Now, a lot of the contracts are already like they can't just hyper scale like hyper scalers can't just pull out because it's already in the contract, but I would like them to see sign these smaller deals like down the line as well, not just with hyper scalers, these smaller mini deals where they can make a lot more money for their megawatt that they're generating, which is what we have seen in the markets lately. So, I would also like to see that. Now, another thing I'm worried about is how quickly like GPU technology changes, right? One of the things that makes Nvidia's business so attractive is that newer generations of GPUs keep, you know, obviously getting better, more powerful, but for infrastructure companies borrowing against those GPUs, the technolo- technological improvements introduce another layer of risk. If older, like for example, if older GPUs become less valuable than expected, the assets supporting certain loans could lose value than anticipated, right? Now, now I actually think demand for older generation for GPUs could remain much stronger than people expect. We already seen that they CoreWeave actually signed A100s a a deal till 2021 and this is a chip that came out in back in 2022, I believe, or 2023, somewhere around there. So, those already have a value of like close to 9 to 10 years, which is which is insane to think about. Um so, these are all the bear cases, but I think what you have to understand is that one of the biggest reasons I'm still bullish on CoreWeave is the broader neo and the broader neo cloud sector is because of Jensen Huang. Jensen Huang needs these companies to succeed and I think a lot of investors are underestimating how important the neo cloud ecosystem is to Nvidia's long-term strategy. Think about what is happening with hyperscalers right now. Microsoft Amazon Google are all investing enormous amount of money into developing their own custom AI chips. And why are they doing that? Because they don't want to remain completely dependent on Nvidia forever. Now, I don't think Nvidia is suddenly going to lose its position in the AI, you know, accelerator market, but over time that growing adoption of custom silicon chips could put pressure on Nvidia's pricing power and its ability to control the broader AI infrastructure ecosystem. And that's exactly why companies like Coreweave, and Nebius, and other dependent like GPU cloud providers are so strategically important to Jensen. These companies are essentially helping build an entirely separate ecosystem of AI computing infrastructure. And much of that infrastructure is built around pretty much only built around Nvidia's hardware and their software CUDA. So, imagine what happens if these new clouds suddenly struggle to finance their expansion. That's a massive problem for Nvidia because these companies are purchasing billions of billions of dollars worth of GPUs and expand the market for Nvidia's technology. And we all know Nvidia has already invested in Coreweave. Um, so I I'm not going to get into that. And they also have a multi-billion-dollar deal under Nvidia to purchase certain unused like Coreweave's capacity to 2032 as well. So, there is a lot of Jensen Huang like magic that's happening here um in in in the new cloud sector and I I expect that to continue as well um because Jensen have a huge or incentive to support these long-term, you know, development of these ecosystem. And because the stronger the independent GPU cloud market becomes, the less dependent Nvidia is on a handful of like hyperscalers as well. So, and this is only going to continue like long-term over time as well. Now, let's zoom out for a second second because I think the investors are so caught up in what's happening over the last few trading sessions that they are almost completely forgot why these companies are spending so aggressively. We are literally in the middle of the largest infrastructure investment cycle we've ever seen. The biggest technology companies are planned to spend extraordinary amounts of money expanding their AI capabilities. And that spending is going to flow into GPUs, advanced memory, to optical networking, electricity generation, massive data center facilities, and I genuinely don't think we reached the the point where the industry has enough computing capacity to satisfy that demand. It's like not even close. Look at how quickly AI usage has been growing. More businesses are integrating AI into their operations, more developers are building applications around these models, and inference demand is becoming increasingly important part of the AI infrastructure story, and that matters because inference creates reoccurring demand for compute. And once a company deploys an AI application that millions of people use every day, that compute requirements don't suddenly disappear. Those models need to run constantly. As more users adopt those application, the amount of infrastructure continues to grow, and this is what we're seeing like with the release of Muse as well. So, that's a great example of where this is happening. So, I think the demand is so high that Coreweave will be able to build out their AI infrastructure, and they will be able to comfortably like get more financing as well because they can go to the banks be like, "This is our backlog. Give us more money." And they're also looking into insurance companies to fund their demand as well based on the AI the GPU depreciation cycle. Because if like if you know anything about the insurance industry, they're very predictable. They use a lot of actual math behind it and a lot of those calculations can be easily calculated depending on the GPU appreciation value of a GPU. So, they they have different markets that they can tap into as well. Now, as far as how I'm thinking about this CoreWeave after the sell-off, I think there are a few things that are much more important than the, you know, stock daily price. And first and foremost, the yield 100% has to come down because if they don't come down, I think the problem is that they won't be able to um raise capital at these 15% like forever because they have to pay more and investors are just going to keep demanding more. That's just how it works. So, they need their yields to come down. And secondly, what I'm watching is the actual financial performance. I want to see revenue growing, backlog converting into deployed capacity. I want and eventually some evidence of the company interest becoming more manageable to relative their earnings and cash generation because ultimately none of these are arguments even matter if the company can't execute. And and finally, I'm watching Nvidia. I think any additional financing partnerships, strategic investments, or capacity agreements involving Nvidia and the broader Neo Cloud ecosystem could tell us a lot about how the industry plans to fund this next stage of AI infrastructure expansion. So, as for my own positioning, I remain bullish on the overall the broader, you know, AI infrastructure trade like memory, the photonics, the power. Still some of the very high conviction trades that I've invested in. I also like the opportunity in Neo Clouds. A lot of the Neo Clouds got smacked right now. Like Nevius is down to 185, CoreWeave is 62. They will probably be be down even more when the market opens. These are very good buy the dip opportunity, guys. If you can buy the dip, if you can afford to do so, buy right now because a lot of these fears will go away. How many times have we seen this market before? It's very volatile volatile. And it's going to be a story till we till we get after the election. I think the volatility will start to come down a bit. I think the market's pricing in a lot of that risk as well. So, just try to dollars cost average here um if you can. So, what do I what do I think about like what's happening in the overall market right now? I think one of the biggest problems I mentioned in my podcast the other day um is that there aren't simply enough buyers to keep multiple sectors running. Like I think this explains like a majority of the price action that we have seen over the last several months. Like think about it. Like when semis run, software sells off. When software sells off, semis run. Like if you hold all these names in your portfolio, your portfolio never reach all-time highs because it just that's just how it works because those two things don't really run up together. And I think that's what's happening in the markets right now. There's not enough money in the market to fund this because a lot of the institutions, a lot of the hedge funds have parked even retail has parked a lot of their money in the money market funds and they're waiting for confirmation for the Iran war to be over. What's going to happen with the election? What happens if Democrats get into power in Congress? What happens if Republicans lose? What happened to the AI infrastructure build out if if something like if Democrats get into power? There's a lot of uncertainty surrounding that right now. And I think until we pass the election, which is number fourth, I believe, or fifth, there's going to be highly volatile. And I think as we go past the election, I think it it will start to normalize. I think this will this will all end and you'll be thankful that you bought the dip. So, buy the dip if you can, guys, and then I remain extremely I don't want to say extremely bullish, cautiously bullish right now. I made a lot of trades today in my Mircle portfolio as well. So, if you want to see those, you can just come join us for a dollar as well. It's just just come join us. I mean, there's a lot of cool conversations that are happening in the Discord as well. So, I think you'll have a great time. Yeah, that's my overall thoughts on the Neil Clough Sell-Off, what's happening in the markets, and every everything in between. I think we're just constantly in this wall of worry. I think eventually we'll get out of this and everything will be A-OK. So, thanks guys. >> Thanks for listening to Milk Road. If you enjoyed the show, make sure you like and subscribe. [music] And if you're struggling to find winners in the market, that's exactly what Milk Road Pro is built for. Our analysts have [music] called some of the biggest winners early, and Pro lets you see what they're buying next, every trade they make, and the research [music] behind every position. Check out Milk Road Pro at the link below. Everything you hear on Milk Road is for informational purposes only. These are our personal opinions, not financial advice, and we may own some of the investments we talk about. Always do your own research and make the decisions that are right for you. See you next time.