Didn’t expect HSBC to pour more cold water on CoreWeave, which has already been getting roasted these past few days. This company used to be a hot stock in the AI sector. Their business model? Borrow money to buy a ton of NVIDIA GPUs, build data centers, and then rent them out to AI companies like OpenAI and Microsoft, charging rent by the hour. But over the past six months, their stock price has dropped nearly 50%. This week, it even fell below $58, hitting a new one-year low. The reason behind this? Their debt is just way too high. They’ve been relying entirely on loans to buy GPUs, but with U.S. interest rates at elevated levels, borrowing is getting more expensive, maxing out their leverage. In the past few days, some analysts have even suggested that CoreWeave’s earnings might not be enough to cover their loan interest. Even folks at JPMorgan are crunching the numbers to see how much damage Wall Street could take if they default. HSBC’s new report is even more blunt. Their business has no real differentiation—it’s just renting out GPUs to a handful of big clients. For the same computing power, they’re earning about 30% less than Amazon and Microsoft, who have the advantage of being major players. On top of that, growth in AI large model companies is slowing down, which could reduce demand for expensive, temporary computing power. And with pressure from the bond market, they’re hesitant to expand further. The good news? Big names like Goldman Sachs are still optimistic about this company.