"New cloud" model faces new challenges! Meta (META.US) "from sponsor to competitor" CoreWeave (CRWV.US) bond falls for two days raising doubts.

AI infrastructure company CoreWeave (CRWV.US), which issued bonds last month, has seen a second consecutive day of decline in bond prices. This comes after reports that Meta Platforms (META.US) is planning to build its own cloud computing business, putting pressure on its stock price and bonds. In the past two trading days, CoreWeave's Euro bond prices have dropped by nearly 2 points to 96.8. The 2 billion euro (approximately $23 billion) bond issuance, the first Euro-denominated high-yield bond issued by a US AI infrastructure company, is facing pressure. The $1.25 billion USD bond issued in June also saw a decline of about 1.3 points to 97.3 at market close on Wednesday. The decline is attributed to Meta's announcement of building a cloud computing infrastructure business to provide AI computing power and model services, directly competing with giants like Amazon.com, Inc. (AMZN.US) AWS, Microsoft Corporation (MSFT.US) Azure, and Alphabet Inc. Class C (GOOGL.US) Alphabet Inc. Class C cloud services, posing a threat to the growth prospects of "new cloud" companies like CoreWeave. CoreWeave has not yet responded to requests for comment. Portfolio manager Mark Remington of EFG Asset Management commented, "These AI concept stocks have not yet undergone a real test." He did not specifically comment on CoreWeave but pointed out, "The business model in this area is novel, risks are concentrated, and long-term profit margins are unclear, making evaluation quite difficult." Unlike traditional mega-scale cloud service providers, "new cloud" companies focus on the specific field of AI cloud infrastructure. CoreWeave, once a cryptocurrency miner, is now known for leasing high-performance graphics processing units (GPUs) on demand, making it one of the most representative companies in the industry. Another "new cloud" company, Dutch company Nebius NV (NBIS.US), saw its convertible bond prices for March 2031 drop by about 21 points to 152 cents after the Meta news. It is worth noting that both CoreWeave and Nebius have lucrative contracts with Meta. Bond portfolio manager at Fisch Asset Management, Alexander's, Inc.Fadd noted, "The AI arms race is quietly moving towards integration." He further stated that Meta has shifted from being a customer of "new cloud" companies like CoreWeave and Nebius to being a competitor, making evaluation from a credit and equity perspective much more difficult.