CoreWeave vs Modal

Janus Henderson Fund Manager Defends CoreWeave Debt Stake

John Lloyd, global head of multi-sector and corporate credit at Janus Henderson, whose fund owns CoreWeave 9.75% bonds due in 2031, sees a buying opportunity despite market skepticism. CoreWeave's debt is distressed with yields above 15%, and its stock has tumbled, but Lloyd believes the selloff is an overreaction. The company has roughly $51.6 billion in total debt and a debt-to-equity ratio of 702%. Analysts expect revenue and EBITDA to ramp up next year, but capital expenditures will also grow. Lloyd suggests CoreWeave can use creative funding methods, such as GPU financing or increased customer prepayments, and notes the company has no near-term maturities. He also highlights tight supply-demand dynamics in AI compute and potential IPOs from Anthropic and OpenAI as supportive factors.

• CoreWeave has roughly $51.6 billion in total debt, including about $35 billion in notes, bonds and loans.
• CoreWeave's 9.75% bonds due 2031 yield to maturity is 15.97%, up over 70% since issuance.
• CoreWeave's stock tumbled 20% over the past week, and its five-year credit default swap spread is nearly 1,081 basis points.

HSBC warns CoreWeave shares to drop over 30%

HSBC has issued a 'reduce' rating on CoreWeave, a cloud infrastructure provider for AI workloads, with a price target of $39, implying a 36% downside from the previous close. The bank cites structural concerns for 'neoclouds', including CoreWeave's high debt load of over $51 billion and weak return on invested capital (8.9% average 2026-30, below its borrowing cost). Credit default swaps have reached distress levels, and the stock has already fallen more than 25% last week and over 21% in the last five days. HSBC also notes moderating revenue from large language models. The call is contrarian, as most analysts (32 of 45) have buy or strong buy ratings, according to LSEG data.

• HSBC initiated a 'reduce' rating on CoreWeave with a price target of $39 per share, implying 36% downside.
• CoreWeave has accumulated over $51 billion in debt to fund its AI infrastructure build-out.
• The company's credit default swap spreads reached distress levels last week.

AI Rally Fades as Neoclouds Fall, IPO Dives

Wall Street's AI rally stalled in Asia and Europe, with neocloud stocks like CoreWeave facing selling pressure despite a Goldman Sachs upgrade. Meanwhile, South Korean AI data center firm Elice saw its shares plunge over 30% on debut, highlighting IPO market jitters. Attention turns to earnings from Netflix and SpaceX, both reporting after the close. Nvidia announced a strategic cooperation with Germany and plans to invest nearly $10 billion in European companies and research institutions. Geopolitical tensions and rising oil prices add to market uncertainty.

• The AI rally on Wall Street faded in Asian and European markets.
• South Korean AI data center firm Elice's shares fell over 30% on market debut.
• CoreWeave shares declined despite an upgrade from Goldman Sachs.

Modal Hits $1B ARR, Raises $750M Series D at $15.75B Valuation

Modal, an AI infrastructure startup, announced it has crossed $1 billion in annualized run rate and raised a $750 million Series D round at a $15.75 billion valuation, led by Accel. The company's usage has tripled since its Series C and grown more than 15x year-over-year. Modal's Sandboxes product, launched in 2023 in response to developers using LLMs to generate code, has become a $300 million run rate product on its own, with nearly 3 billion sandboxes spun up and scaling to a million concurrent. The funding round marks Modal's transition from an infra unicorn to an infra decacorn, positioning it as a key player in the AI infrastructure space.

• Modal raised a $750M Series D at a $15.75B valuation, led by Accel.
• Modal crossed $1B in annualized run rate.
• Usage has tripled since Series C and grown over 15x year-over-year.

Runtime recap: the full keynote, VM Sandboxes, Modal Clusters, and more.

Modal announces a runtime product update with VM Sandboxes and Modal Clusters, as highlighted in a blog post.

Modal Labs closing in on $750M round at $15.75B valuation

AI inference infrastructure provider Modal Labs is nearing a $750 million funding round led by Accel at a $15.75 billion valuation, according to a source. This would more than triple its valuation from $4.65 billion in May. The round comes amid surging demand for inference services, with other startups like Baseten, Fireworks, and Fal also raising at higher valuations. Modal Labs, founded in 2021 by Erik Bernhardsson and Akshat Bubna, provides infrastructure for training and running AI models without managing servers. The company has surpassed $300 million in annualized revenue as of May. The funding talks follow a security incident in July where a customer's data was compromised, but Modal's platform was not breached.

• Modal Labs is nearing a $750 million funding round led by Accel at a $15.75 billion valuation.
• The round would more than triple Modal Labs' valuation from $4.65 billion in May.
• Modal Labs has surpassed $300 million in annualized revenue as of May.