Shares in CoreWeave fell 15.46% on Wednesday and then dropped another 5.62% in post-market trading after Chamath Palihapitiya posted a chart on X showing the yield on the company’s bonds touching 15%.
That yield matters. It signals investors were demanding a steep premium to hold the debt of the AI 'neocloud' provider, a company now sitting on a large pile of obligations while still losing money.
According to its Q2 earnings release, CoreWeave had operating lease liabilities of $16.3 billion and total debt of $35.6 billion. The company posted $4.6 billion in revenue in the quarter, but operating expenses exceeded sales and it ended with a net loss of $1.4 billion.
The question is straightforward: how does a company with those numbers service $52 billion in combined debt and lease commitments?
Evan Schlossman, principal at Neostellar Capital Corp., argues that the answer is in the backlog. CoreWeave disclosed $103.7 billion of 'remaining performance obligations,' or RPOs, and said 41% of that is scheduled to be paid through 2028.
RPOs are agreements for services a company knows it will be paid for in the future, with the revenue not yet delivered. Companies can only disclose them when the agreements are noncancellable. Schlossman described them as 'take-or-pay' contracts with 'extremely high-credit-worthy customers.'
CoreWeave said '98% of our revenue is from committed, take-or-pay contracts' and that it structures most of its financing so customer cash flows repay the associated debt and generate additional free cash flow.
Its major customers are Microsoft and OpenAI. CoreWeave said its top three customers generated 72% of its revenue in Q2, with the third customer undisclosed.
Schlossman said it is 'highly unlikely' Microsoft would go bankrupt and leave CoreWeave exposed. He added that one of the few ways Microsoft could exit the contracts would be if a force majeure event prevented CoreWeave from delivering services. He also said OpenAI’s commitments are backed by RPOs from other companies.
CoreWeave’s defenders are making a simple case: the debt is large, but so is the contracted demand. The market has already voted by pricing the bonds at 15%, and that is not the same thing as a free pass.
For investors and lenders, the principle at stake is clear. Capital rewards clear rules, but it also punishes overconfidence when leverage outruns earnings. If the customer contracts hold, CoreWeave can keep borrowing. If they do not, the bill lands where it always does: on the balance sheet and on the people financing it.
