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CoreWeave (CRWV) has delivered aggressive gains since its IPO, and management has doubled down on the post-IPO winning strategy. The stock fell by more than 51% from its June peak to September, but it is rebounding. It received an upgrade with the price target to $180 and a significant $6.5 billion OpenAI deal.

You’d expect the stock to soar on the news, considering other companies that have partnered up with OpenAI and inked such contracts have done so. However, Wall Street seems to be sighing.

This new deal is an expansion of earlier deals that take the total partnership value to $22.4 billion. CoreWeave is aggressively expanding capacity and will likely sign even more deals with OpenAI in the future… but there’s a problem.

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Not every AI deal is a good one

CoreWeave’s motto so far has been growth at any cost, and while that did pay off early on, the market is growing distasteful. The $6.5 billion number looks good on paper, but CoreWeave’s financials are precarious, and it has a significant debt load.

Debt was reported at $14.56 billion in Q2 2025, and this new deal will make things even worse. The company's debt structure is built around two major Delayed Draw Term Loans (DDTLs) from Blackstone and Magnetar Capital, with interest rates ranging from 11% to 15%. The total debt-to-equity ratio is 381.14%.

The company also uses GPUs as collateral, and these GPUs depreciate quickly. This new deal will make things worse.

Once the AI rally starts maturing, CRWV stock could be the first domino to fall. The debt servicing is not sustainable. The return on invested capital (ROIC) metric was negative in Q1 and barely positive in Q2. I’d sell.

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