The AI infrastructure boom was looking unstoppable, but recent events have revealed just how fragile the industry really is. CoreWeave, the high-performance computing powerhouse, has seen its stock plunge more than 60% from its June highs.
Investors are starting to wonder if the AI gold rush might be hitting its limits.
The Wall Street Journal reports that CoreWeave’s struggles highlight two major risks. First, the company relies heavily on high-interest debt to buy advanced NVIDIA chips. Second, its revenue depends on a handful of massive clients, including OpenAI, Microsoft, and Meta. When just a few customers hold so much influence, any disruption can ripple across the business.
Even seemingly small setbacks have had an outsized impact. Heavy rain in North Texas delayed concrete pours at a key data center, slowing the deployment of critical computing capacity.
On top of that, CoreWeave’s $9 billion acquisition of Core Scientific fell apart in October after shareholder pushback over the leveraged deal, shaking investor confidence further.
The ripple effects are hitting beyond CoreWeave. Oracle and Broadcom both flagged slower-than-expected AI spending in their Q3 earnings, sending their shares tumbling in the past week.
Bitcoin miners who pivoted into AI-focused high-performance computing are also feeling the squeeze. Companies like IREN and Cipher Mining, which surged over 500% earlier this year, are now down roughly 50% as debt-fueled expansion and declining AI demand weigh on the market.
CoreWeave’s stock continues to slide, falling another 4% on Tuesday and dropping below $70 for the first time since May. The rapid decline serves as a stark reminder that even in a booming sector, infrastructure, debt, and client concentration can expose cracks in the foundation.
The message is clear: the AI infrastructure boom is not invincible, and investors are starting to wake up to the risks behind the hype.
