Microsoft trims its neocloud roster just before CoreWeave reports Q3
The customer behind 67% of CoreWeave's 2025 revenue is shrinking its neocloud roster, while CoreWeave's 2032 bonds yield above 16% and its CDS sits near 1,155 basis points. Monday's Q3 print is the first under the new demand regime.
Vincent Jiangthree-minute read
CoreWeave+6.23% — CoreWeave, up 6.23 percent today reports third-quarter results on November 10 13, days after Microsoft−0.86% — Microsoft, down 0.86 percent today began deciding which of its neocloud partners to keep 1. Microsoft paid for CoreWeave's rise: the company accounted for 62% of CoreWeave's 2024 revenue when it went public, and about 67% of its 2025 revenue 14. CoreWeave's bonds already yield above 16%, and its five-year credit default swaps, the cost of insuring its debt against default, sit near 1,155 basis points 56.
Microsoft is reviewing which neoclouds to keep
Neoclouds are startups that rent out graphics-chip capacity from dedicated data centers to AI companies. Microsoft signed deals with six of them, CoreWeave, Nebius+8.21% — Nebius, up 8.21 percent today, Chronoscale, IREN+20.35% — IREN, up 20.35 percent today, Lambda and Nscale, and is now in an evaluation stage with no decisions made, according to people familiar with the matter 1.
It has already opted not to renew a deal with Oracle+0.47% — Oracle, up 0.47 percent today, walked away from Nscale's England site over power access and declined to renew an Nscale Texas contract 15. A Microsoft spokesperson called the strategy one "built on flexibility and choice," and said the company prioritizes its own data center footprint 1. Nebius, which reports a $17.4 billion, five-year Microsoft contract, fell 15% on the news even though the report disclosed no action against it 5.
The backlog's terms are read against that policy
Neither company has published the Microsoft contract's duration or prepayment terms. What is on the record: CoreWeave's dependence on Microsoft rose from 62% to 67% of revenue between 2024 and 2025 4, and its other disclosed anchor deals run long, Meta's+1.11% — Meta, up 1.11 percent today $21 billion contract through December 2032 and Nvidia's+3.65% — Nvidia, up 3.65 percent today $6.3 billion commitment to buy unsold capacity through 2032 4.
Those long-dated contracts are collateral: neoclouds borrow against new deals, which is why Microsoft saying no to Nscale hurt CoreWeave with its own contracts untouched 3. The $104.2 billion backlog also mixes credit quality, and a commitment from an investment-grade hyperscaler finances more cheaply than one from a young AI customer 7.
CoreWeave's financing cost now exceeds its earnings power
The 15% yield itself is not new; CoreWeave's curve has been stressed since mid-October 7. What changed on Friday is that five-year credit default swaps spiked above 1,289 basis points, widening past their October peak, before easing to about 1,155 6. The unsecured curve now yields 15.50% to 17.41% against coupons of 8.5% to 9.75% 5.
CoreWeave's bond yields sit six to eight points above their coupons
Every CoreWeave senior note yields far above its coupon
- Coupon
- Yield to maturity
Data
| Coupon | Yield to maturity | Change | |
|---|---|---|---|
| 8.5% notes due 2032 | 8.500 | 15.500 | +82.4% |
| 9.625% notes due 2032 | 9.625 | 16.000 | +66.2% |
| 9.75% notes due 2031 | 9.750 | 17.410 | +78.6% |
Last quarter CoreWeave booked $2.575 billion of revenue, a $626 million net loss and $640 million of net interest expense, against that $104.2 billion backlog 5. For the third quarter it has guided interest expense of $860 million to $940 million against adjusted operating income of $200 million to $260 million 3.
CoreWeave's revenue doubles year over year while net losses deepen
- Revenue
- Net income
Data
| Revenue | Net income | |
|---|---|---|
| Q1 '25 | $0.98B | -$0.34B |
| Q2 '25 | $1.21B | -$0.29B |
| Q3 '25 | $1.37B | -$0.11B |
| Q4 '25 | $1.57B | -$0.42B |
| Q1 '26 | $2.08B | -$0.74B |
| Q2 '26 | $2.58B | -$0.63B |
CoreWeave guided Q3 interest expense above its best-case operating income
Even at best case, operating income covers a quarter of the interest bill
- Low end of guidance
- High end of guidance
Data
| Low end of guidance | High end of guidance | Change | |
|---|---|---|---|
| Net interest expense | 860 | 940 | +9.3% |
| Adjusted operating income | 200 | 260 | +30.0% |
The equity has already voted too: CoreWeave is down 50.72% in a month and 63.14% in six months, and Nebius is down 49.26% in a month 5.
The demand is real, the question is who gets paid
The bulls have a case. IREN's AI revenue more than doubled from the prior quarter to $200 million, and its co-CEO said there is a "disconnect between what we're seeing in public market and what we're seeing at the customer level" 1.
Goldman Sachs−0.12% — Goldman Sachs, down 0.12 percent today counts five AI bond deals totaling $67 billion since October 29, pushing hyperscaler debt issuance this year to $296 billion 6. None of that means AI financing is collapsing 6. But that money prices at spreads, and Microsoft's policy says the anchor customer plans to rent from fewer providers while building its own data centers 1.
What Monday's print decides
CoreWeave reports into a regime where its interest bill already exceeds its best-case operating income 3. The yield implies bondholders are underwriting whether contracted cash arrives before debt service, not how big the backlog is. The test is whether the 2032 bond's yield falls back below 15% after the print or holds above it, and whether management breaks the backlog out by customer credit quality and contract duration 7.
CoreWeave default insurance costs about eight times Nvidia's
Insuring CoreWeave debt costs roughly eight times insuring Nvidia's
Data
| Value | |
|---|---|
| CoreWeave | 1,155 bp |
| Oracle | 298 bp |
| Nvidia | 139 bp |
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