CoreWeave stock plunges 12%, but Wall Street analyst says to buy the dip

CoreWeave (CRWV) stock plunged 12% on Oct. 16, putting the AI ​​infrastructure company on track to finish the week down 25%, as concerns over AI funding continued to weigh on market sentiment.

Earlier this week, Bloomberg reported a sharp rise in CoreWeave’s bond yields, raising questions about whether the company can generate enough cash flow to support its rapid expansion.

CoreWeave’s bond yields climbed to around 15%, while the cost of insuring its five-year debt against default rose 74.5 basis points to 1,194.5 basis points, an all-time intraday high, according to Bloomberg. This could mean a greater than 60% chance that CoreWeave will default in the next five years.

CoreWeave has spent heavily on data centers and Nvidia (NVDA) chips to meet the growing demand for AI computing power.

The company has secured major contracts with AI developers and technology companies, but building the infrastructure to fulfill those deals requires a substantial upfront investment.

Nvidia CEO Jensen Huang defends CoreWeave

The drop on Friday, Oct. 16, came after CoreWeave stock rebounded the day before, following comments from Nvidia CEO Jensen Huang that helped ease some concerns.

“CoreWeave’s strength is improving every day,” Huang said at a Bloomberg event in Stockholm. “I’m optimistic. Their cost of capital is coming down.”

Nvidia owns about 47.2 million shares of CoreWeave, or about 10% of the company’s stock. CoreWeave is also a major customer for Nvidia’s chips.

However, Huang’s reassuring words failed to sustain the rebound.

Peer Nebius (NBIS), another company that invests heavily in AI computing infrastructure, fell about 12% on October 16 and was also headed for weekly losses. Nvidia is also investing in Nebius.

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In August, CoreWeave reported second-quarter results that beat Wall Street expectations.

The company reported an adjusted loss of $1.03 per share, narrower than the $1.20 loss analysts expected. Revenue was $2.58 billion, up 112% year over year and above the $2.56 billion estimated by Wall Street.

For the third quarter, CoreWeave forecasts revenue between $3.4 billion and $3.6 billion, implying growth of 158% at the midpoint. Analysts surveyed expected $3.43 billion, CNBC reported.

CoreWeave also reported a revenue lag of over $100 billion. This means he hasn’t earned that money yet.

Analyst Recommends Buying CoreWeave Stock on Downside

Despite the recent selloff, Cantor Fitzgerald analyst Brett Knoblauch believes investors are focusing too much on CoreWeave’s debt and overlooking its improving business fundamentals.

In a research note, Knoblauch said the rise in CoreWeave’s debt yield reflects concerns about financing massive capital spending on AI rather than weakening demand, according to StockTwits, citing The Fly.

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Knoblauch said demand remains strong, with almost all of CoreWeave’s 2027 capacity already sold and Nvidia providing a safety net for unsold capacity. He also highlighted the improving economic situation, including increased revenue per megawatt and contribution margins, which reduced the payback period for AI chips to 2 to 2.5 years.

Knoblauch believes that improving unit profitability and asset-backed financing can help CoreWeave maintain its rapid growth, despite concerns about borrowing costs.

Cantor Fitzgerald maintained its overweight and $176 price target on CoreWeave shares, recommending investors buy the dip.

CoreWeave stock is trading at around $61 at the time of writing.

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This story was originally published by The street on October 16, 2026, where he first appeared in the Invest section. Add TheStreet as Favorite source by clicking here.