Cathie Wood bought into Wednesday’s ugly AI sell-off while cutting exposure to one of the sector’s biggest winners.
ARK Invest purchased 188,665 CoreWeave shares worth about $12.4 million after CRWV plunged 15.46% to $65.78. At the same time, ARK sold 31,432 Palantir shares worth roughly $6.3 million.
The sale was a trim, not an exit. Wood is taking some money off a richly valued AI software winner and adding to an infrastructure stock whose debt market is flashing serious warning signs.
CoreWeave stock tests Cathie Wood’s dip-buying thesis
CoreWeave’s 16% plunge was not an ordinary pullback, as the company has built its growth story around extraordinary demand for AI compute, but that expansion has required enormous amounts of debt and lease financing.
The company has roughly $48 billion of debt, while yields on some unsecured bonds recently approached 15%.
Bernstein analyst Madison Rezaei told Investor’s Business Daily that CoreWeave’s unsecured bond yields had reached levels “typically associated with distress.”
That matters because higher bond yields raise the cost of financing every additional data centre and block of Nvidia-powered capacity.
For a company whose strategy depends on continuing to build aggressively, expensive capital can erode future growth economics even if demand remains strong.
CoreWeave debt is the real test of the AI bet
The bull case is still substantial. CoreWeave has a revenue backlog of roughly $104 billion, while management has said nearly all 2027 capacity is sold.
But backlog is not profit, and the company had about $52 billion of combined debt and lease obligations at the end of June. Second-quarter net interest expense reached $640 million.
D.A. Davidson analyst Gil Luria offered the sharpest warning for shareholders today.
“The equity value is going to be zero,” Luria said on the Prof G Markets podcast.
That was a downside scenario if the AI investment cycle weakens, not his formal price target. Luria argues that CoreWeave is borrowing at about 9% while earning roughly 1% on its investments.
His concern is simple. Growth destroys value if the return on new infrastructure cannot eventually exceed the cost of funding it.
Palantir valuation makes profit-taking easier to understand
Palantir presents almost the opposite risk, as the company is executing strongly, and its shares remain up more than 60% since August.
Revenue growth has accelerated, Wall Street sentiment has improved and Goldman Sachs upgraded the stock to Buy.
But the valuation leaves little room for disappointment.
Palantir closed Wednesday at $200.97 and trades at roughly 129 times forward non-GAAP earnings, according to TipRanks, far above the software sector.
That makes ARK’s sale look less like a rejection of Palantir and more like expectations management.
Bokeh Capital Partners chief investment officer Kim Forrest told Reuters that investors worry that major AI companies may not generate the earnings or revenue previously anticipated.
For Palantir, the risk is that extraordinary growth is already priced in. For CoreWeave, the risk is that future growth becomes too expensive to finance.
Wood appears willing to swap the first problem for the second.
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