Stock Market Today, Aug. 18: CoreWeave Falls as Debt-Financing Concerns and Capital Spending Pressures Rise With Interest Rates
CoreWeave (NASDAQ:CRWV), an AI cloud infrastructure provider, closed at $93.17, down 12.10%. Shares fell as investors rotated out of high-risk growth stocks and worried about debt-financing costs.
Trading volume reached 36.6 million shares, coming in nearly 21% above its three-month average of 30.2 million shares. CoreWeave IPO'd in 2025 and has grown 133% since going public.
How the markets moved today
The S&P 500 (SNPINDEX:^GSPC) fell 0.67% to 7,693, and Nasdaq Composite (NASDAQINDEX:^IXIC) declined 1.33% to 26,290. Among specialized cloud computing and AI infrastructure services peers, Nebius Group (NASDAQ:NBIS) closed at $248.43, down 7.60%, while Applied Digital (NASDAQ:APLD) ended at $28.51, down 8.56%.
What this means for investors
CoreWeave shares plunged today as investors rotated away from riskier growth names and priced in higher debt-financing costs amid long-term treasury yields reaching nearly 20-year highs.
CoreWeave and other AI infrastructure providers are still spending heavily to build compute capacity ahead of planned revenue boosts. CoreWeave reported $9.4 billion in capital spending in Q2 alone. It holds nearly $30 billion in long-term debt to finance its capital spending plans.
Higher interest rates and fears of overspending are prompting many investors to take profits on AI stocks and reallocate to safer sectors. CoreWeave shareholders should accept that risk, though, as it is a long-term investment in AI compute growth. Long-term investors may even want to add to the stock on dips like today as long as an appropriate amount of capital is being deployed to the high-risk name.
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Howard Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
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