CRWV's high leverage and negative FCF create a risk that debt markets will close, preventing profitable AI expansion.

Another company that falls under the same category is Korwef. You may notice that these companies are ranked in the second tier in the field of artificial intelligence; they are not giant companies that generate hundreds of billions of dollars in operating cash flow.

It is true that its free cash flows may be somewhat negative, but it is able to finance most of its projects through operating cash flows. With Oracle and CoreWave, we are talking about companies that will have to borrow.

CoreWave is a company with a huge market value of $47 billion, while its revenues over the past twelve months do not exceed $7.6 billion. We face similar challenges to those we face with Oracle.

In the last quarter, the second quarter of 2026, its cash balance was $5.5 billion, but in that quarter alone, its negative free cash flow was $5.7 billion. This is due to the massive expansion in the field of artificial intelligence, and the huge capital expenditures that the company invests.

And the surprise? The size of the debt on the balance sheet is constantly increasing. Let's compare these debts, which are short-term and long-term debts, amounting to $35 billion.

Will all these debts eventually be paid off? We don't see that in the numbers yet. Negative return on invested capital. As with Oracle, they build these projects by signing contracts, some long-term and some short-term.

Therefore, you are taking two risks. So, you're saying, "We'll be able to carry out this project for long-term contracts, but what if the price of renting AI drops in the short term?"

You take this risk, and borrowing costs continue to rise.

This is Coreweave's 8.5% debt, which was released in June 2026. The rate has increased from 8.5% to over 12% today. That is, the cost of capital in debt markets exceeds 12%.

This is a short-term debt compared to the Oracle debt that it offered, as it will mature in 2032, i.e., for only six years. The market says, "We'll need a huge return to be able to give you this debt."

If this situation continues for Oracle and Korwef, it will be difficult for them to make a profit from the capital expenditures they invest. Eventually, the debt markets will close to both companies, and then the game will be over.