CoreWeave's $52 Billion Debt Question Gets an Answer From Investor

CoreWeave stock fell 15.46% on Wednesday and dropped another 5.62% after the close, after venture capitalist Chamath Palihapitiya posted a chart on X showing yields on the company's bonds touching 15%. His question: "Is the AI buildout creating a private credit bubble?"

The same day, The Financial Times published an interview with CoreWeave co-founder and finance lead Brannin McBee, who said he wants to borrow even more — from insurance companies. The insurance sector's access to capital "is unlimited," McBee told the paper. "Like, that's all the money in the world that sits in the insurance tranche."

The numbers behind the selloff are stark. According to CoreWeave's Q2 earnings release, the AI "neocloud" provider carries $16.3 billion in operating lease liabilities and $35.6 billion in total debt — $52 billion combined. Revenue for the quarter was $4.6 billion, operating expenses exceeded sales, and the company booked a $1.4 billion net loss.

The debt has drawn critics before. A 2025 Fortune analysis concluded CoreWeave had the potential to be "ground-zero for a future AI financial meltdown." Gartner estimates 80% of neocloud providers will cease independent operations by 2030 because revenues won't cover outgoings. And in September, Oracle issued a "force majeure" citation to Blue Owl, the developer of a massive New Mexico data center, over worries the site won't be finished when it's scheduled to come online in 2028.

But Evan Schlossman, principal at Neostellar Capital Corp., a publicly traded VC fund, says the bears are misreading the balance sheet. Neostellar bought a $25 million stake in CoreWeave in 2024 and sold 40% of it for a $15 million gain in Q2 2025.

What backs the debt?

CoreWeave holds $103.7 billion in "remaining performance obligations" (RPOs), with 41% scheduled to be paid through 2028, its Q2 disclosure states. RPOs are agreements to deliver services the company knows it will be paid for. Companies can only disclose them if the contracts are noncancellable — "take-or-pay" deals, Schlossman told Fortune, with "extremely high-credit-worthy customers."

A take-or-pay contract binds the customer to pay even if it doesn't use the service. CoreWeave's major customers are Microsoft and OpenAI. Its top three customers — the third is undisclosed — generated 72% of Q2 revenue, the company said.

Microsoft going bankrupt and leaving CoreWeave unpaid is highly unlikely, Schlossman argued. In fact, one of the few escape hatches in their agreement, filed with the SEC, is an Oracle-style "force majeure" event that prevents CoreWeave from delivering its services.

That's why lenders keep extending credit, he said: the debt is backstopped by non-cancellable RPOs from companies with a "tier-one balance sheet, that is underwriting this."

CoreWeave itself put it plainly. "We are confident in our backlog, which more than supports all of our debt obligations," the company told Fortune. "98% of our revenue is from committed, take-or-pay contracts. We structure the majority of our financing so that cash flows from customer contracts repay the associated debt and generate additional free cash flow."

Does the counterparty risk hold up?

OpenAI's balance sheet isn't as solid as Microsoft's, but its commitments to CoreWeave are themselves backstopped by RPOs OpenAI holds from other companies of Microsoft's quality, Schlossman said. "A lot of these contracts are backstopped by other companies," he noted. And even if OpenAI disappeared, its compute contracts are worth more now than when they were signed — meaning CoreWeave could resell that capacity.

"I understand how they're going to get paid back on this, how much they're going to make, and what are the specific risks associated with this," Schlossman said.

He concedes not everything in the AI ecosystem passes a stress test. Smaller venture-backed companies whose customers are also early seed-round startups may not survive a downturn. "If there is something that goes wrong, I think you're going to see that it's going to matter significantly who owes you money, as it does in most businesses," he said.

Will Microsoft honor the contracts?

Skeptics aren't buying it. Francine McKenna, the accountant and investigative journalist who has taught at The Wharton School and Cambridge and now writes the accounting Substack The Dig, doesn't believe Microsoft will deliver on CoreWeave's RPOs if compute demand softens.

"If CoreWeave is counting on Microsoft to honor its contracts and bail them out of extreme debt and losses I have a bridge in Brooklyn I'd like to sell them. Microsoft is ruthless and will eat CoreWeave for lunch and throw bones to its dogs if it makes sense for them," McKenna told Fortune.

Microsoft declined comment.

A Deutsche Bank chart of corporate bond yields puts CoreWeave's borrowing costs in context. AA-rated AI names — Meta, Alphabet, Nvidia, Amazon — borrow at around 5–5.5% at the front end, while BBB-rated Oracle and SpaceX cluster at 8–8.5% at 10–12 years' duration, Deutsche's Jim Reid said in an email. CoreWeave, rated BB+, sits well above both groups — the spread investors now demand to hold the neocloud's paper as the 2028 RPO schedule comes into view.

By Amara Osei