Gil Luria warns CoreWeave shareholders could be wiped out if AI spending falters

CoreWeave’s $104 billion revenue backlog would not necessarily protect shareholders if AI spending weakens. On October 14, D.A. Davidson analyst Gil Luria warned on the Prof G Markets podcast that the company could miss interest payments and its equity could become worthless. His warning describes a downside scenario, not his formal forecast.

Luria’s argument centers on the cost of financing AI infrastructure, rather than a claim that demand has already collapsed. He remains bullish on AI demand, according to Benzinga. But he singled out CoreWeave as particularly vulnerable to a turn in the investment cycle, saying its expensive borrowing could leave it unable to meet debt obligations.

The gap Luria says borrowing cannot bridge

Luria put CoreWeave’s borrowing cost at around 9% and estimated that its investments were earning returns of about 1%. Even the 4%–5% returns he said the company targets would fall below that borrowing cost. Those return figures are his assessment, not independently verified results.

He illustrated the mismatch as borrowing at 9% to buy Treasury bonds yielding 5%: the investment would bring in less than the financing costs. His warning is that, if conditions deteriorate, CoreWeave could miss interest payments. In a severe restructuring, creditors would have priority over shareholders.

The company’s reported figures show a growing interest burden. Second-quarter net interest expense reached $640 million, more than double the $267 million recorded a year earlier. CoreWeave also reported a $626 million net loss. Its combined debt and lease obligations stood at approximately $52 billion at the end of June.

CoreWeave’s reported second-quarter net interest expense rose from $267 million a year earlier to $640 million.

McBee’s defense: expansion, not a broken business

CoreWeave co-founder Brannin McBee offered a different interpretation in comments to the Financial Times, quoted by Benzinga. He defended borrowing as a way to grow faster and said nearly all of the company’s 2027 capacity was sold. His position is that spending reflects continued expansion rather than weakness in the existing business.

McBee said the company would be “immensely cash-flow positive” if it stopped building. Meanwhile, Visible Alpha consensus forecasts cited by the FT project $71 billion in cumulative negative free cash flow from 2026 through 2028. That is a forecast, not an amount CoreWeave has already spent.

The backlog provides evidence of contracted demand, but it represents future revenue, not profit. CreditSights analyst Jordan Chalfin raised another concern in comments to the FT quoted by Benzinga: long data-center leases paired with shorter customer contracts. He questioned why customers would renew with CoreWeave if the industry overbuilds.

A selloff, and the search for cheaper funding

By Wednesday’s trading session, the pressure extended across CoreWeave’s stock and debt. Bloomberg News reported that shares fell as much as 17%, their biggest drop since February. Debt due in 2032 traded below 78 cents on the dollar, after investors bought it at face value just four months earlier.

Luria’s stark language did not accompany a new zero-dollar price target. D.A. Davidson had downgraded CoreWeave from Buy to Neutral in May, when he assumed coverage, and cut its target from $175 to $100. The podcast warning describes what he believes could happen if the AI investment cycle turns.

CoreWeave is seeking cheaper financing from insurers to keep building AI infrastructure. That effort is a plan, not a completed financing deal. It leaves the immediate dispute unresolved: McBee sees borrowing as the means to meet sold capacity, while Luria argues that the cost of that borrowing threatens shareholders if growth weakens.