Amid market concerns over debt default risks, CoreWeave (CRWV.US) receives backing from Jensen Huang: financial strength continues to improve, financing costs are declining.

As debt risks at artificial intelligence (AI) cloud computing service provider CoreWeave (CRWV.US) spark market concerns, NVIDIA Corporation (NVDA.US) CEO Jensen Huang has stepped forward to offer support for this key partner and investment target. He said CoreWeave's financial strength is continuing to improve, its financing costs are actually declining, and he does not currently believe NVIDIA Corporation needs to provide additional financial guarantees for it. In an interview while attending an event in Stockholm, Sweden, Huang said: "CoreWeave's strength is growing every day." When asked whether NVIDIA Corporation needs to provide financial support to CoreWeave, Huang said there is no such need and stressed that he is optimistic about the company's development prospects. "I'm optimistic. In fact, their cost of capital is coming down." Huang's latest remarks come as CoreWeave faces increasingly severe pressure in the bond market. Although market demand for AI computing power remains strong, investors have begun to re-examine the business model of emerging AI cloud computing companies such as CoreWeave, which relies heavily on debt to build data centers, as well as the financial risks that related financing arrangements may bring. According to ICE Data Services, the spread on CoreWeave's five-year credit default swaps (CDS) widened by as much as 74.5 basis points to 1,194.5 basis points, the highest intraday level on record. CDS are typically used by investors to hedge against corporate debt default risk, and a rise in their price means the market is demanding higher compensation for default risk. Based on the market pricing of the relevant credit default swaps, the implied probability of a CoreWeave debt default within the next five years has exceeded 60%, indicating that bond investors' concerns about its debt-servicing capacity have increased significantly. However, it should be noted that this probability reflects pricing in the credit derivatives market and does not mean the actual probability of a CoreWeave default over the next five years will necessarily reach that level. CoreWeave is one of the representative companies in the recent AI infrastructure investment boom. As technology giants and AI developers continue to increase demand for computing power, the company has achieved rapid business expansion by purchasing NVIDIA Corporation GPUs on a large scale, building data centers, and providing AI computing services to customers. However, this growth model requires continuous investment of huge amounts of capital. Because data center and GPU equipment purchases often need to be completed before customers pay, CoreWeave relies heavily on debt financing and other external sources of funds to support infrastructure construction. As the scale of financing continues to expand, investors have begun to worry that once financing costs rise, growth in AI demand slows, or customer contracts fail to generate sufficient cash flow, the company may face increasing financial pressure. At the same time, the close commercial and capital relationship between CoreWeave and NVIDIA Corporation has also made it an important case for the market in assessing the sustainability of the AI infrastructure investment model. NVIDIA Corporation is not only an important GPU supplier to CoreWeave, but also its second-largest shareholder, holding about 10% of the company's shares. On the one hand, this relationship enables CoreWeave to obtain key AI computing hardware and industry support; on the other hand, it has also raised market concerns about so-called "circular financing." Circular financing refers to AI chip suppliers supporting downstream customers through investment or financing arrangements, while those customers use the related funds to purchase the suppliers' products. The market worries that such circular flows of funds may amplify the apparent scale of AI infrastructure demand, making it difficult for investors to accurately judge end-customer demand and the actual profitability of related projects. CoreWeave is therefore regarded as an important case for testing whether the business model of emerging AI cloud computing companies can be sustained over the long term. For NVIDIA Corporation, CoreWeave's financial condition is not only related to the value of its equity investment, but also affects the market's judgment on the sustainability of AI computing demand and infrastructure investment. If emerging cloud computing companies such as CoreWeave can improve their financial condition while continuing to expand, it will help strengthen investors' confidence in the AI infrastructure investment cycle; conversely, if the debt pressure on related companies continues to worsen, it may also intensify market doubts about the AI investment boom. Huang's emphasis this time that CoreWeave's financial strength is continuing to improve and that financing costs are declining clearly stands in sharp contrast with the risk signals recently released by the credit market. However, Huang did not provide specific financial data in the interview to support this judgment. Against the backdrop of significantly higher pricing for debt default risk, investors will next focus on whether CoreWeave can obtain new financing at reasonable cost, improve cash flow, and control its debt burden while continuing to expand AI computing supply. For the entire AI industry, CoreWeave's financing situation is also becoming an important indicator for measuring whether the AI infrastructure investment boom can sustainable commercial returns. As of press time, CoreWeave (CRWV.US) narrowed its decline to 2.89%, after falling nearly 15% at one point earlier.