Investing.com -- Nvidia CEO Jensen Huang expressed confidence in CoreWeave’s financial position, saying the AI infrastructure provider does not need a financial backstop from the chipmaker even as credit markets signal rising default concerns.

“CoreWeave’s strength is improving every day,” Huang told Bloomberg at an event in Stockholm. “I’m optimistic. Their cost of capital is actually decreasing.”

CoreWeave shares were last down 3% on Thursday after plunging 15% in the previous session, having fallen more than 7% earlier in the day.

The disconnect between Huang’s assessment and credit-market pricing highlights the growing scrutiny of the debt-fueled expansion of AI infrastructure. The cost of insuring CoreWeave’s debt against default over five years surged as much as 74.5 basis points to a record intraday high of 1,194.5 basis points, according to ICE Data Services. The pricing implied a more than 60% probability of default over five years.

CoreWeave has borrowed heavily to build out its computing capacity, with suppliers including Nvidia helping finance its expansion. The arrangements have raised concerns about circular financing, in which supplier support helps fund purchases of the equipment those same suppliers sell.

Nvidia owns approximately 10% of CoreWeave, making it the company’s second-largest shareholder, while also supplying its computing equipment. Huang’s comments therefore carry added significance as investors weigh the financial exposure of companies backing the AI infrastructure buildout.

CoreWeave’s ability to fund its expansion and service its debt has become a broader test of the AI boom’s financial sustainability. Even if demand for computing power continues to grow, infrastructure providers must turn that demand into sufficient cash flow to justify their borrowing and investment.

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