CoreWeave and other neocloud stocks drop after Microsoft capex comes in below expectations

Microsoft's Q1 capital expenditure of $45.2 billion was below estimates due to delays in third-party cloud capacity. Neocloud stocks like CoreWeave, Nebius, Iren, and Applied Digital fell. Microsoft expects higher CapEx in Q2 and a total of $170 billion for the year. Alphabet also reported lower-than-expected CapEx. Iren raised $363 million through debt financing.

Nvidia (NVDA) invested $3 billion in Meta Platforms (META) as part of a broader strategy to fund AI ecosystem growth. Nvidia's equity investments surged to $42.4 billion in H1 2027, up 30-fold from the prior year. The company aims to expand growth opportunities and strengthen its competitive position. Nvidia's net income for the latest quarter was $59.7 billion, with $96.2 billion in revenue. Other investments include CoreWeave (CRWV), Nebius Group (NBIS), Lumentum (LITE), and Coherent (COHR).

The Federal Reserve held interest rates steady at 3.75%-4% in a 10-2 vote, with two members dissenting. The decision had minimal market impact, and Fed Chair Kevin Warsh hinted at future rate hikes. AI infrastructure stocks, particularly CoreWeave (CRWV), reacted positively, with CRWV rising 5.6%. The Fed's stance on rates remains crucial for tech and growth stocks, especially those sensitive to borrowing costs.

Global bond issuance reached $6.61 trillion, up 15% year-over-year, driven by AI infrastructure spending. Amazon became the fourth-largest issuer, with tech companies dominating bond markets. Cloud and data center issuance surged to $368 billion, raising concerns about supply absorption and higher yields. Investors demand more compensation amid rising financing costs and geopolitical tensions.

CoreWeave (CRWV) rose 7.32% to $63.93 on Wednesday after launching new AI capacity in Denmark, but slipped post-market following Microsoft's lower-than-expected capex. Microsoft, a major CoreWeave customer, reported $45.2B in capex, missing estimates of $50.7B. CoreWeave's backlog stands at $104B, but its debt exceeds $35B, raising funding concerns. The broader market saw gains, with the S&P 500 and Nasdaq up 0.32% and 0.27%, respectively.

CoreWeave (CRWV) shares rose 7.32% to $63.93 after announcing new AI capacity in Denmark. Trading volume was 58.3M, 53% above average. The company has a $104B backlog but $35B in debt, with some yields over 15%. Investors watch for earnings updates on growth and funding.