CoreWeave shares rose by more than 6% on Tuesday following the announcement that the company’s data center capacity in Copenhagen is largely operational. This development aims to reassure investors regarding the progress of the firm's infrastructure expansion.
Despite the stock growth, financial concerns persist due to the company's heavy reliance on debt. CoreWeave’s quarterly net interest expenses climbed to $640 million between April and June, up from $267 million during the same period last year.
The market reflects these risks through high bond yields. A $2.75 billion bond issue, which carries a 9.75% annual interest rate until 2031, is currently trading at a price that pushes potential annual yields to 15.76%.
CNBC host Jim Cramer suggested that Nvidia should purchase these high-yielding bonds if it is confident in CoreWeave's financial stability. Nvidia currently holds a 10% stake in the company and has a $6.3 billion agreement to buy computing capacity through 2032.
Wall Street analysts maintain a generally positive outlook, with 22 out of 30 recommending a buy. The average 12-month price target is $130.92, representing a potential 124% upside from the Tuesday morning price of $58.54.
