CoreWeave collapse sparks fears in the AI infrastructure boom

CoreWeave Inc., the American artificial intelligence cloud-computing company, has watched $33 billion of value disappear in six weeks. This hit is mainly due to investor concerns over a potential AI bubble and inconsistent signals from the company’s leadership.

The AI infrastructure provider has dropped 61% from its all-time high of $187 mid-year. It has also dropped nearly 39% over the past three months alone. This sharp selloff caused investors to raise questions about whether the AI infrastructure provider can rebound in 2026.

Investors raise concerns over the company’s high-interest debt dependence

According to reports, the selloff was fueled by a failed merger with data center provider Core Scientific, delays in infrastructure buildouts, and sharp criticism from short seller Jim Chanos. This issue began when Core Scientific, one of OpenAI’s main data center providers, had to delay the planned buildout of the Denton data center because of unexpectedly heavy rain.

Additionally, investors are concerned that the company relies heavily on high-interest debt to finance purchases of advanced AI chips from Nvidia and rents out computing power to major clients. 

The company also depends on a small number of large customers, including OpenAI, Microsoft, and Meta, for the majority of its revenue.  At the same time, capital expenditures are expanding at a faster rate than revenue growth, adding to concerns about an AI bubble.

When CoreWeave’s plan to buy Core Scientific for $9 billion fell through at the end of October, investor trust dropped even more. Core Scientific (CORZ), a former Bitcoin miner that now rents out data centers, turned down the deal after shareholders warned that it would put them at risk of CoreWeave’s volatile share price and over-leveraged balance sheet.

Meanwhile, CoreWeave has closed down, as the market’s once-hot “AI infrastructure” trade continues to cool. The stock closed at $69.59, down 3.81% for the day. It had traded between $67.92 and $71.42 that day, with approximately 13.33 million shares changing hands.

Besides CoreWeave, other AI companies have faced a similar fate. Broadcom shares fell 5.6% on Monday following an 11% slump on Friday. This has left them 18% below their record high reached on Wednesday. Oracle dropped 2.7% on Monday and is now down 17% in the past three trading days. The company has lost 46% of its value since Sept. 10.

CoreWeave faces a valuation crisis

In response to these issues, Mizuho has adjusted its price target for CoreWeave. This reflects a revised 2026 outlook for the software group. 

D.A. Davidson analyst Gil Luria also stated that CoreWeave has one of the ugliest balance sheets in the technology sector. He has a sell rating on the stock and a price target of $36, implying 50% downside potential. He noted that the company’s 4% operating margins fail to cover debt interest, casting doubt on future profits. 

Cathie Wood’s ARK Investment, on the other hand, has faith in CoreWeave’s future because it bought 137,000 shares. Daniel Ives, an analyst at Wedbush, says that they will benefit from the fact that demand for AI computing capacity, including GPUs and other specialist parts, is currently higher than supply. He also added CoreWeave to his list of IVES AI 30 things to do in 2026.

Additionally, Roth MKM analyst Rohit Kulkarni started covering the stock with a buy rating and a price goal of $110. This implies that the stock could go up 52% from its current level. His prediction is that CoreWeave will have one of the top four market shares in the huge AI cloud market, which will grow faster than the standard internet cloud market.

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