CoreWeave plunges 25% in a single week, highlighting the tug-of-war between fear and greed in AI trading.

CoreWeave Inc. is caught in a tug-of-war among investors: one side believes rising bond yields could kill the rally in AI-themed trades, while the other believes demand for computing power will soon make those concerns a thing of the past. The cloud-computing provider's stock plunged 20% over the first three trading days of the week, including a drop of more than 15% on Wednesday, while its bond prices fell to levels that typically signal distress. On Thursday morning, the cost of protecting against a CoreWeave bond default rose to a record intraday high, and swap pricing showed the company's probability of default within the next five years at more than 60%. By Thursday afternoon, panic appeared to ease and CoreWeave's stock turned higher. Nvidia CEO Jensen Huang, a CoreWeave shareholder and supplier, expressed confidence in the company, and Deutsche Bank also called the selloff a "buying opportunity." CoreWeave closed up 5.9% that day. But worries returned on Friday, with CoreWeave shares falling 12%, bringing the weekly decline to 25% its worst weekly performance since November.