CoreWeave is seeking a large-scale loan backed by its computer chips as collateral, a funding avenue the fast-growing AI cloud provider is leaning on heavily even as portions of its existing corporate debt continue to trade in distressed territory — a level that signals investor concern about whether those borrowings will be repaid.

Chief Executive Michael Intrator said the company is stepping away from unsecured borrowing under present conditions. "Looking ahead, we will not use the unsecured debt market to fund our business at current yields. Nor do we need to," he asserted, arguing that under current conditions the chip-backed loan is an effective way to raise money.

Investors have been keeping a very close eye on how the company plans to fund its infrastructure buildup. Over the past few months, CoreWeave's stock and bonds have been hit hard by growing fears about the massive borrowing used to build its data centers, and the firm's shares have lost roughly 40% of their value over the past month.

Analysts at Wolfe Research have argued that neocloud companies — AI-focused providers that rent out GPU computing capacity — need to be fully transparent about how much cash they require to clear their order backlogs and meet their targets. Giving investors a clear roadmap of which funding channels will be used, and when, would go a long way toward calming the market, they said.

Chip-backed loans to cover most equipment costs

CoreWeave intends to use the new loan to purchase Nvidia chips and infrastructure equipment. It expects an interest rate of 7% to 7.5%, which would slash its unsecured debt borrowing costs by more than half — a discount that reflects lenders' ability to recoup the chips and equipment themselves if the company fails to pay, rather than relying solely on its general creditworthiness. Depending on the customer, the chip-backed loans would cover anywhere from the full equipment cost to 70% of it, Intrator said.

The company also expects an influx of about $9 billion in client deposits and advance payments over the next three months, and it plans to keep pressing for more. According to Intrator, advance funding is simply a more attractive path in the current market. He added that the firm will not seek any additional unsecured financing at the moment, given prevailing high interest rates.

The financing strategy highlights the difficult balance AI infrastructure providers face. Building data centers requires substantial upfront capital, while revenue from those facilities may take time to cover construction, equipment, electricity, and financing costs. CoreWeave must therefore continue to secure funding while ensuring that its expanding customer contracts generate sufficient cash to meet its obligations. The shift toward asset-backed loans and customer advances suggests the company is becoming more selective about how it finances its expansion, as it works to align new borrowing with revenue-generating customer contracts.

"Their interest expense is far higher than adjusted operating income — that tells you that the business they generate from these data centers is not enough to pay down the debt that they're accruing," said CoreWeave CEO Michael Intrator.

CoreWeave projects revenue above $13 billion

CoreWeave has increased its revenue forecast for the year to $13 billion to $13.3 billion, higher than its earlier upper forecast of $13.2 billion and the $12.9 billion estimated by Wall Street analysts. The new forecast provided some relief to parts of the investor community, which remains worried about the company's enormous debt burden and aggressive expenditure plan.

"If CoreWeave can string together several quarters in a row of this type of execution, that fear would subside," said Brian Mulberry, chief market strategist at Zacks Investment Management.

For its third quarter, CoreWeave made $3.66 billion in revenue, which surpassed Wall Street's expectations of $3.56 billion, and the cloud services provider also reported a smaller-than-anticipated loss of $1.27 per share, compared with the estimated $1.46 per share.

According to the chief executive, the results show that the company is doing well, scaling quickly, and attracting loyal customers. He reiterated that the company's operating profits are well above its interest costs and that CoreWeave will generate net profits by 2028.

Microsoft spending questions linger

A downturn could still be brewing for CoreWeave, though. Microsoft, which historically accounted for the lion's share of CoreWeave's sales, noted it is scaling back capital expenditures because some of its neocloud partners are running behind schedule, though it did not specify which ones.

CoreWeave's reliance on major technology customers — Microsoft in particular — for its revenue remains a point of vulnerability, as those clients have historically made up a big part of the total. If Microsoft cuts back on infrastructure spending, CoreWeave's growth plans could be affected. If major customers delay data center projects or scale back their AI infrastructure commitments, CoreWeave might not be able to deploy equipment quickly enough to generate returns and service its debt, underscoring the stakes of its customer concentration. Against that backdrop, the near-term signposts are concrete: whether the projected $9 billion in client deposits and advance payments arrives over the next three months, whether the chip-backed loan is completed on the expected 7% to 7.5% terms, and whether CoreWeave can sustain the consecutive quarters of execution Mulberry described as the bar for easing concerns about its debt.