Oracle and CoreWeave Face AI Bubble Risks with $15 Billion Debt
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 1h ago
0mins
Source: Fool
- Oracle's Debt Surge: Oracle reported revenue and profit growth in its latest earnings, yet capital expenditures soared 200% year-over-year, with projected spending of $50 billion in fiscal 2026, significantly exceeding the previous $35 billion estimate, indicating heavy reliance on AI and financing pressures.
- Rising Debt Risks: In September, Oracle raised $18 billion in a bond sale, maintaining an investment-grade credit rating, yet bond yields have slipped into junk territory, reflecting market concerns over its debt repayment capabilities.
- CoreWeave's Overleverage: CoreWeave's revenue has tripled over the past year, but its $15 billion debt is nearly four times its total revenue, with interest expenses now accounting for over 20% of total revenue, highlighting its precarious financial situation.
- Customer Concentration Risk: CoreWeave's revenue is almost entirely derived from a handful of clients, including Microsoft and other hyperscalers, and if AI demand cools, this concentration could lead to existential threats, especially as competitors may opt to build their own infrastructure.
Analyst Views on CRWV
Wall Street analysts forecast CRWV stock price to rise over the next 12 months. According to Wall Street analysts, the average 1-year price target for CRWV is 149.70 USD with a low forecast of 36.00 USD and a high forecast of 430.00 USD. However, analyst price targets are subjective and often lag stock prices, so investors should focus on the objective reasons behind analyst rating changes, which better reflect the company's fundamentals.
25 Analyst Rating
13 Buy
11 Hold
1 Sell
Moderate Buy
Current: 95.010
Low
36.00
Averages
149.70
High
430.00
Current: 95.010
Low
36.00
Averages
149.70
High
430.00
About CRWV
CoreWeave, Inc. is a cloud infrastructure technology company. The Company offers the CoreWeave Cloud Platform, which consists of software and cloud services that deliver the automation and efficiency needed to manage complex artificial intelligence (AI) infrastructure. Its CoreWeave Cloud Platform is an integrated solution that is purpose-built for running AI workloads such as model training and inference. Its solutions include infrastructure services, managed software services, and application software services. Its Infrastructure Services provide its customers with access to advanced graphics processing unit (GPU) and central processing unit (CPU) compute, highly performant networking, and storage. Its Managed Software Services include CKS, a flexible virtual private cloud and a bare metal service that runs kubernetes directly on high-performance servers. Its Application Software Services build on top of its infrastructure and managed software services, integrating additional tools.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
