NBIS and CRWV drop 10% and 9% respectively amid rising credit-default-swap costs signaling higher default risks.
Nebius Group (NASDAQ:NBIS) and CoreWeave (NASDAQ:CRWV) led declines in AI cloud stocks Wednesday, falling 10% to $152.58 and 9% to $61.53. The selloff reflects growing concerns over leveraged AI infrastructure financing as credit markets tighten.
Credit-default-swap (CDS) costs for CoreWeave surged to 855 basis points, implying a 50% five-year default probability. The company, junk-rated with negative free cash flow since 2022, reported Q1 2026 interest expenses doubling to $536 million and free cash flow of negative $4.71 billion. NBIS and CRWV stocks are down 43% and 36% over the past month, respectively.
The broader SKYY cloud ETF remained stable, while NVIDIA (NVDA) dropped 3% as its CDS also reached new highs. The repricing highlights investor skepticism about the sustainability of AI capex amid rising borrowing costs.