CoreWeave’s Quarterly Interest Costs Surge to $640 Million as Capital Spending Intensifies

Key Points

• CoreWeave’s interest expense climbed every quarter over the past year, reaching $640 million in the second quarter.

• Management says it has cut the company’s weighted average cost of debt by almost 300 basis points.

• Full-year guidance implies roughly $19 billion to $23 billion of capital spending still to come in the second half.

Shares of artificial intelligence (AI) cloud infrastructure provider CoreWeave (NASDAQ:CRWV) trade around $82 as of this writing, down about 47% from their 52-week high. Yet the business continues expanding at a remarkable pace. Second-quarter revenue rose 112% year over year to roughly $2.6 billion, and the company’s revenue backlog reached approximately $104 billion (a figure that excludes more than $25 billion of new commitments added early in the third quarter).

The cost of financing that growth is climbing even faster. CoreWeave’s interest expense hit $640 million in the second quarter, 2.4 times the $267 million it recorded a year earlier.

And the bond market isn’t helping. The 30-year Treasury yield has closed above 5% on 55 days since the start of January, marking the most closes above that threshold in any year since 2006.

To be fair, CoreWeave doesn’t borrow at 30-year maturities, and its debt doesn’t price anywhere near Treasury yields. But in a bond market like this, borrowed money could remain expensive for an extended period. And CoreWeave needs significantly more of it.

Image source: The Motley Fool.

More debt, cheaper debt

CoreWeave’s interest expense has increased every quarter over the past year, rising from $267 million in the second quarter of 2025 to $311 million, $388 million, $536 million, and now $640 million. The primary driver is the balance, not the rate. Total debt reached approximately $35 billion as of June 30, up from about $21 billion at the end of 2025. That represents substantial debt for a company that completed its initial public offering (IPO) less than 18 months ago.

The rate, in fact, has moved in CoreWeave’s favor.

“Over the past year, we have reduced our weighted average cost of debt by almost 300 basis points, representing approximately $1.1 billion of annualized interest saving based on our end of Q2 debt load,” chief financial officer Nitin Agrawal stated in the earnings call.

Those savings are tangible. Low-rate convertible notes and expanded credit facilities have replaced some of the more expensive borrowing from earlier in its cloud build-out. Still, the bill more than doubled, because the balance grew far faster than the rate declined.

How expensive is all that debt?

CoreWeave’s latest quarterly filing lists effective interest rates for its borrowings, and the range is wide: 2% on its convertible notes, mostly 9% to 11% on its term loans and senior notes, and 15% on its oldest term loan.

Weighting each rate by its balance produces a blended cost of approximately 8.4%. On a balance this size, each percentage point costs more than $350 million annually.

New money continues to arrive above that average. CoreWeave issued senior notes at 9.75% in April and 9.625% in June, plus euro-denominated notes at 8.5%, resulting in effective rates of 9% to 10% once fees and discounts are factored in.

Additionally, the $2.6 billion term loan facility added in August prices at 5.5 percentage points over the benchmark short-term lending rate.

The broader bond market offers little indication of relief on the horizon. The 30-year yield touched 5.34% in mid-August, its highest level since 2007, and stands at approximately 5.27% as of this writing.

The bill keeps climbing

Management expects third-quarter interest expense of $860 million to $940 million, a roughly 41% increase at the midpoint, against $200 million to $260 million of adjusted operating income.

Operating profit was already trailing significantly. Adjusted operating income reached $128 million in the second quarter, down from $200 million a year earlier even as revenue more than doubled.

However, the maturity schedule appears manageable. Approximately $4.4 billion of principal comes due through year-end and $6.2 billion in 2027, while nearly $15 billion isn’t due until after 2030. Refinancing isn’t the near-term concern. New borrowing is.

That’s because the capital outlays aren’t slowing. CoreWeave spent $16.1 billion on capital expenditures in the first half, and its full-year guidance of $35 billion to $39 billion implies roughly $19 billion to $23 billion more in the second half.

Against that, CoreWeave held approximately $5.5 billion of cash at the end of June, a relatively modest cushion given spending plans of that magnitude.

Ultimately, the second quarter demonstrated a company becoming more efficient at borrowing while needing more capital than ever. The spending builds the AI infrastructure behind the $104 billion of contracted revenue already secured. Yet the interest bill is climbing faster than the operating profit expected to support it.

That gap is the metric worth monitoring. Interest expense ran about $500 million ahead of adjusted operating income in the second quarter, and guidance suggests the distance will widen further in the third.

Source link