CoreWeave to the Rescue
A shot in the arm for AI... No more unsecured debt for CoreWeave for a while... It's still one of our 'canaries'... The stage is set for more biotech outperformance... Money is just starting to flow back in... What to do as AI hits healthcare...
CoreWeave saves the day...
As we wrote on Monday, tech stocks faced a "washout" last week. Put simply, too many investors were too bullish on tech (sometimes with leverage), and they all headed for the exits at once.
Today, earnings from "neocloud" CoreWeave (CRWV) gave the AI trade a much-needed boost...
The data-center provider more than doubled its revenue to $3.7 billion in the quarter, according to earnings it reported after the close yesterday. And it expects full-year revenue of between $13 billion and $13.3 billion – which would represent a more than 150% jump from 2025.
CoreWeave also reported a net loss of more than $700 million, widening from a $110 million loss in the same quarter last year. The huge drop was mostly due to CoreWeave's debt costs (more on that in a bit).
But operating income topped $200 million, quadrupling from the same quarter last year. CoreWeave also raised its full-year operating income forecast to between $1.275 billion and $1.375 billion – 26% higher than its previous forecast.
Investors loved what they saw from CoreWeave...
The stock surged more than 25% by noon, and held onto those gains for the rest of the day. And since it boasts some of the largest companies in the AI space as customers, it propelled the entire AI sector higher today.
Fellow AI-focused neoclouds like Nebius (NBIS) and Iren (IREN) jumped 15% and 5%, respectively. And the Nasdaq Composite Index rose 1.6%, leading the major U.S. indexes.
CoreWeave wants to bring its interest spending under control...
One of the biggest red flags for CoreWeave has been its massive debt load and the cost of servicing this debt (which we covered in the October 15 Digest). In the third quarter alone, CoreWeave paid nearly $850 million in interest on its debt. That was more than 4 times its operating income of $207 million for the quarter.
On the company's earnings call, Chief Financial Officer Nitin Agrawal said the company doesn't plan to issue more unsecured debt through 2027 at such high interest rates. Last month, yields on some of CoreWeave's unsecured debt surged above 15%.
But as our colleague and senior analyst Alan Gula explained in his "defense" of CoreWeave last month, a lot of the company's debt is in the form of "delayed-draw term loans" ("DDTL"). As Alan wrote...
These loans are backed by the chips. But, more importantly, what lenders are really counting on is the "offtake agreement" behind each project – the contract a client signs to buy CoreWeave's computing power for a set number of years at a set price.
Think of a trucking company that borrows to buy a fleet of trucks for a five-year hauling deal with Walmart. A bank is really lending against Walmart's signature, and the client's payments flow back to cover the loan. So, lenders are mostly sizing up the customer, not the borrower itself.
And since CoreWeave boasts some of the largest hyperscalers – like Microsoft (MSFT) and Meta Platforms (META) – as customers, lenders have been more willing to offer CoreWeave debt at more attractive interest rates.
As Alan pointed out, CoreWeave's DDTL loans "only" yield about 6%. That's much more manageable than the 15% (or higher) yield on some of its unsecured debt.
Still, CoreWeave is not out of the woods...
It's projecting between $37 billion and $39 billion in capital expenditures this year, which is greater than its entire market cap. It has never reported a net profit, and as a public company, it has had only one quarter with positive free cash flow.
And CoreWeave's operating profit – while growing 300% from the same quarter last year – cannot come close to covering its debt obligations.
So it'll have to raise even more capital at some point. And as we saw with Oracle (ORCL), companies can forget their debt-related pledges.
So while the stock is soaring today on the earnings report, the next announcement of a new debt raise could take the wind right out of CoreWeave's sails.
But, at least for today, investors liked what they saw from CoreWeave. We're still watching CoreWeave and Oracle as the "canaries" in the AI coal mine.
Without the strong operations of a company like Microsoft or Meta, they are much more vulnerable to changes in investor sentiment and funding for AI.
Meanwhile, another sector is outperforming...
In recent Digest issues, we've highlighted the strength in healthcare as investors have rotated out of some of the high-flying AI names. And a lot of that outperformance is coming from one part of the healthcare space – biotechnology.
The State Street Health Care Select Sector SPDR Fund (XLV) is up more than 21% so far this year... just about double the 11% return for the S&P 500 Index. And biotech stocks have done even better.
The iShares Biotechnology Fund (IBB) is up more than 29% so far in 2026. And it recently hit a new 52-week high, while the broader market continues to grind sideways. That bodes well for more outperformance in the months to come.
As our colleague and DailyWealth Trader editor Chris Igou explained in yesterday's issue...
Since 1993, the Nasdaq biotech index has outperformed after a new 52-week high more often than not. Check it out...
Biotech stocks have been a great performer for more than three decades. The annualized return over that period is 12.6%. But you can do even better when you buy after a new 52-week high.
It sounds counterintuitive. But the numbers bear it out. Similar cases led to gains of 5.6% in three months, 9.3% in six months, and 15.1% over the next year.
And some of those gains were massive. More from Chris...
The biggest winner over six months was 42%. That goes up to 73% over a year. So you can see just how powerful a biotech rally can be.
Meanwhile, the biggest losers over those periods were 20% and 19%, respectively.
Plus, nine cases led to double-digit gains over a year. Only three cases led to double-digit losses.
While a lot of the AI attention has been on the hyperscalers, biotech companies are a clear beneficiary of the megatrend. As the World Economic Forum wrote in January, "AI could help make some of the most difficult steps in drug discovery faster and smarter."
But many investors are on the sidelines when it comes to biotech...
In an article in August, the biotech-investment firm RTW explained that the strong performance has not brought a flow of new investors to the sector...
Prices rallied into year-end 2025, but capital did not follow. Flows stayed flat to negative through the first half of 2026, and cumulative flows remain deeply negative over the longer term. The market is behaving like a recovery while most investors remain standing on the sidelines.
That's just for individual investors, though. On the other hand, the "smart" money is flowing back into biotech.
As MarketWise CEO Dr. David "Doc" Eifrig wrote in the November issue of his healthcare-focused Prosperity Investor newsletter...
Throughout the first nine months of 2026, biopharma companies raised $23.9 billion in venture funding, according to investment bank J.P. Morgan. Another 22 companies went public, raising $7.5 billion.
Those stock offerings alone surpassed the full-year totals for every year from 2022 through 2025, both in dollars raised and the number of companies going public.
All this shows that money is flowing back into biotech. Investors are showing a renewed appetite to fund the next wave of treatments after the post-COVID-19 biotech bear market.
Now, larger investors are back betting on biotech. And soon, individual fund flows could follow and push the sector even higher.
Doc's message on the convergence of AI and healthcare...
It's not just venture capital and IPO money flowing into the healthcare sector. In an all-new, free presentation, Doc explains that the government is also throwing its weight behind AI technology in healthcare.
As Doc went on to say in his presentation...
The [Trump] administration has already put more than $5 billion in federal commitments behind this program... funding 278 projects across more than 15 agencies.
And I expect a lot more of its financial muscle to get behind it soon.
And a lot of that money is going to one area that Doc believes could become the next "shortage" in the AI boom. Doc has identified a small group of stocks that could double as more money flows into the sector.
Watch Doc's full message right here.
New 52-week highs (as of 11/10/26): American Financial (AFG), Berkshire Hathaway (BRK-B), Disney (DIS), Descartes Systems (DSGX), Global Payments (GPN), Intercontinental Exchange (ICE), Coca-Cola (KO), Eli Lilly (LLY), Nasdaq (NDAQ), Procter & Gamble (PG), Starbucks (SBUX), Tradeweb Markets (TW), Invesco DB U.S. Dollar Index Bullish Fund (UUP), and Veralto (VLTO).
In today's mailbag, thoughts on Nvidia CEO Jensen Huang's affair with an alleged Chinese spy, which we wrote about on Monday (and our colleague Whitney Tilson covered in his free daily yesterday)... Do you have a comment or question? As always, e-mail us at feedback@stansberryresearch.com.
"The Jensen Huang affair reminds me of the Big Bang Theory episode when Leonard Hofstadter hooks up with Joyce Kim, who turns out to be a North Korean spy." – Stansberry Alliance member G.F.
"The market feigning 'shock' at every piece of 'bad news', and the constant teenager like extreme pendulum swings of sentiment have gotten old..." – Subscriber E.C.
All the best,
Nick Koziol
Baltimore, Maryland
November 11, 2026
