Jonathan Rose, a trading expert, warned investors about potential risks associated with artificial intelligence stocks, specifically CoreWeave Inc. (CRWV) and Oracle Corp. (ORCL), on August 17, 2023. His concern stemmed from these companies’ significant borrowing to fund AI infrastructure, raising red flags in their financial stability. At the time of his warning, CoreWeave was trading around $106.
Since then, the situation worsened; by October 15, 2023, CoreWeave’s stock had plummeted to approximately $61, marking a decline of around 42% in just two months. Oracle also experienced significant losses, with its stock under pressure due to rising inflation and increased borrowing costs. Rose highlighted that while both companies have contracts in place, their financial strength to deliver on growth remains uncertain.
Rose noted that the cost of borrowing for CoreWeave had escalated, with its bonds yielding around 15%, indicating increased investor skepticism. He emphasized the importance of monitoring unusual trading activity and understanding financial risks when investing in stocks, especially in volatile sectors like AI.
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