![](\"https:\/\/www.thestreet.com\/.image\/NDA6MDAwMDAwMDAzMjI0NjM5\/coreweave-and-nebius-have-debt-on-their-balance-sheet.jpg?profile=rss\")
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Neoclouds were supposed to be the picks and shovels of the artificial intelligence (AI) boom. Over the past month, that story has turned much harder to sell.<\/p>\n
CoreWeave and Nebius are both down more than 35% over the past month, while IREN has lost 40%. <\/p>\n
Investors are worried about companies that borrow heavily to buy Nvidia chips and build data centers.<\/p>\n
Both stocks have pulled back recently, so investors tend to lump them in the same bucket. However, the balance sheets of the two companies are quite different in terms of debt levels. <\/p>\n
Also Read: CoreWeave, Oracle have an interest rate problem<\/p>\n
2 CEOs, 2 funding plans<\/p>\n
Both CEOs explained how they pay for growth just weeks before the sell-off.<\/p>\n
At the Goldman Sachs (GS) Communacopia + Technology Conference on Sept. 8, CoreWeave CEO Mike Intrator said the company has no fixed playbook for raising money.<\/p>\n
It looks for the cheapest and most effective way to fund its expansion plans.<\/p>\n
Intrator said CoreWeave’s largest borrowing is tied through SPVs, which are separate entities that hold the debt. <\/p>\n
Each SPV is tied to a customer contract. He cited Microsoft (MSFT) as an example, which is also the customer.<\/p>\n
Its payments flow into the SPV and repay the lenders first, before any money goes back to CoreWeave. That lets lenders judge the loan by Microsoft’s credit. <\/p>\n
Intrator said the company also raised convertible debt at the parent level. One structure earned an A- credit rating, which he said let CoreWeave borrow at a cost close to what the big cloud providers pay. <\/p>\n
Related: Goldman Sachs sends CoreWeave shareholders a surprising signal<\/p>\n
The latest deal went further. Lenders agreed to take on renewal risk, meaning they will fund a project even if the customer contract has to be renewed later.<\/p>\n
“The market struggles to understand what we have done in the debt markets,” Intrator said.<\/p>\n
A day later, Nebius CEO Arkady Volozh took the stage at Citi’s 2026 Global TMT Conference. <\/p>\n
He said Nebius started with a 10 MW data center and $2.5 billion in cash. Big contracts with Meta and Microsoft helped pay for its own cloud business, Volozh added.<\/p>\n
CoreWeave’s debt, in plain numbers<\/p>\n
Let’s start with the June 2026 balance sheet. <\/p>\n
CoreWeave reported $27.6 billion in long-term debt. <\/p>\n
Another $7.5 billion comes due within a year, which adds up to $35.1 billion.<\/p>\n
A year earlier, the total was $11.1 billion, which means debt has more than tripled. <\/p>\n
In the last three months, debt has increased by $10.2 billion. <\/p>\n
The company ended Q2 with $5.5 billion in cash, which covers about 16 cents of every dollar of debt.<\/p>\n
Leases add $16.5 billion, widening total liabilities to $72 billion, against $77.1 billion in assets. <\/p>\n
Shareholders’ equity was only $5.0 billion, so debt is roughly seven times equity.<\/p>\n
CoreWeave is spending heavily on capital expenditures as net property, plant and equipment rose to $63.3 billion, up from $20.0 billion a year ago.<\/p>\n
Why Wall Street is on edge<\/p>\n
CNBC reported that CoreWeave is now worth about $30.5 billion, down from a peak valuation of $90 billion as its unsecured debt yields about 15%.<\/p>\n
Earlier this month, the spread on its five-year credit default swaps hit levels generally seen as distress. <\/p>\n
Intrator tried to calm nerves in an employee memo that CNBC obtained. He said the company mixes infrastructure-backed borrowing, corporate debt, equity, and customer prepayments.<\/p>\n
Analysts polled by FactSet expect third-quarter free cash flow of negative $10.1 billion, the worst since CoreWeave began reporting. <\/p>\n
Baird analyst Rob Oliver estimates the company may need to raise about $30 billion in 2027. <\/p>\n
Nvidia invested $2 billion in CoreWeave in January at $87.20 a share for a 10% stake. The stock now trades near $56. Source: CNBC<\/p>\n
Nvidia CEO Jensen Huang recently said that CoreWeave doesn’t need a safety net, meaning Nvidia would not have to step in with more money.<\/p>\n
Some investors disagree and said further help from Nvidia may be needed if credit conditions continue to worsen, CNBC reported.<\/p>\n
Goldman, JPMorgan, and Barclays remain bullish on the debt-heavy neocloud stock, while pointing to GPU-backed loans and customers such as Microsoft and Meta. <\/p>\n
Goldman upgraded the stock to buy and put CoreWeave in the top quartile of neoclouds, CNBC noted.<\/p>\n
Nebius and CoreWeave are raising debt to fund expansion plans.<\/p>\n
Andriy Onufriyenko \/ Getty Images<\/p>\n
Nebius debt looks far lighter<\/p>\n
Nebius ended Q2 with $8.5 billion in debt, while the cash balance stood at $8 billion. So, the net debt is around $0.5 billion. <\/p>\n
Equity is $10.3 billion, so debt is about 0.8 times equity. Total liabilities were $17.6 billion against $28.0 billion in assets, and leases add $1.5 billion.<\/p>\n
Its debt has grown quickly, though. A year earlier, Nebius owed just under $1.0 billion. That is nearly a ninefold jump, but from a tiny base. <\/p>\n
Since March, the total has barely moved.<\/p>\n
The bill still to come<\/p>\n
Nebius still has a funding problem to solve. Asked at Citi what investors should watch over the next year, Volozh put financing second on his list, right behind building the data centers.<\/p>\n
Building 5 GW would take about $250 billion, he said. Nebius has financed roughly 20% so far and still needs more than $100 billion to fuel its expansion plans. <\/p>\n
This is where Nebius’s debt picture could change. Its debt today is $8.5 billion, and each additional $50 billion Volozh mentioned is nearly six times that amount. <\/p>\n
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He didn’t say how much of it would be borrowed. But if debt covers a large share, Nebius would look much more like CoreWeave.<\/p>\n
The market backdrop adds pressure. <\/p>\n
Elon Musk wrote on X that debt markets have almost entirely shut off for companies without substantial revenue outside AI data centers, according to CNBC. <\/p>\n
He predicted painful consolidation among more than 200 neoclouds, which compete directly with SpaceX. <\/p>\n
The verdict on neocloud debt<\/p>\n
CoreWeave carries about four times the debt of Nebius. Notably, Nebius also has cash covering about 94% of its debt, compared with about 16% at CoreWeave.<\/p>\n
A debt-heavy balance sheet does not mean CoreWeave is in immediate trouble. <\/p>\n
Its loans are tied to customers like Microsoft and Meta, which CNBC described as investment-grade, and Goldman Sachs upgraded the stock to buy this month. <\/p>\n
However, Nebius has far more room to absorb a bad quarter.<\/p>\n
Watch CoreWeave’s third-quarter report next month. For Nebius, watch how it finances the next $50 billion. <\/p>\n
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