CoreWeave's bonds yield 16%. Investors are asking who actually pays for the AI boom.

CoreWeave's bonds stayed under pressure on Thursday even as its shares rebounded, Reuters reported, despite CEO assurances about the company's deal backlog. Another sign that investor confidence in the AI buildout is fraying.

The loss-making AI cloud company is carrying about $50 billion in debt, Reuters reported, and has become the market's poster child for concerns that the data-centre boom is being financed with borrowed money — straining smaller players and pressuring cash flows even at giants such as Alphabet and Meta Platforms.

The yield on CoreWeave's April-issued bonds due 2031 hovered near 16 percent, a level Reuters noted typically signals distress. The cost of insuring the company's debt against default climbed to around 1,000 basis points, a level that implies a nearly 63 percent chance of default within five years, up from about 30 percent a year ago, Reuters reported.

Huang says calm down

Nvidia CEO Jensen Huang, whose company holds about a 10 percent stake in CoreWeave, tried to restore confidence. "CoreWeave's financial strength is improving every day," Huang told reporters at a Stockholm event, adding that he did not see a need for Nvidia to backstop the company. "I'm optimistic. Their cost of capital is actually decreasing."

A global rout, and Canada watches

CoreWeave's slide fed a global selloff in AI-related stocks. The stock slipped as much as 8.3 percent to its lowest level since May 2025, Reuters reported, before reversing to close up about 5.9 percent at $69.69, after a more than 15 percent drop on Wednesday.

In Canada, the S&P/TSX Composite closed up 553 points, or 1.6 percent, at 36,137 on Thursday — but the advance came on falling bond yields rather than conviction about AI, with pressure on AI technology shares offset by broader gains. Reuters noted the jitters come as investors await Anthropic's planned IPO, a test of whether rapid revenue growth can ease worries about runaway AI spending.

Why it matters for Canadians

Canadian investors are along for this ride whether they own CoreWeave or not. AI-linked names make up a large share of the global indexes held in RRSPs, TFSAs and pension plans, and Canadian pension funds are among the world's most active backers of AI infrastructure and private credit — the exact corner of the market now under scrutiny. When debt markets start pricing distress into the poster child of the AI buildout, every portfolio with exposure feels it.