The Bond Market Blinked First
In June, CoreWeave sold $1.25 billion of bonds paying 9.625% a year.
Four months later, those same bonds sell for about 80 cents, a 20% loss for anyone who bought in June.
Last quarter, CoreWeave paid $640 million in net interest and still lost $626 million.
Its debt has more than tripled in a year to $35.6 billion.
CoreWeave is the extreme case. But it isn’t the only AI company that borrowed its way into this race.
The Big Borrowers and The Two Paying Debt Down
Think about what Alphabet, Meta and Nvidia used to be. They were cash machines that barely borrowed, so when rates went up, they didn’t care.
Their long-term debt from mid-2025 to mid-2026, according to their SEC filings:
- Alphabet went from $24.9 billion to $101.1 billion, about 4 times as much.
- Meta nearly tripled, from $28.8 billion to $83.7 billion.
- Amazon went from $56.1 billion to $133 billion.
- Nvidia added $25 billion, almost all of it last quarter.
The interest bills followed. Alphabet paid $1.28 billion in interest last quarter, about 5x what it paid a year earlier, and Meta’s tripled. Alphabet also spent $44.9 billion building out AI last quarter while bringing in $39.1 billion of operating cash.
In April, Meta sold a 40-year bond paying 6.45%, when the 10-year Treasury paid about 4.4%. The 10-year now sits above 5.2%, so the next round of borrowing costs more.
Not everybody joined the party.
Microsoft cut its debt over the same stretch, and so did Apple.
When rates rise, keep your eye on that split.
The Line I’m Watching On The Q’s
Inflation came in at 3.7% in September, hotter than expected. That turned an October Fed meeting most traders had written off into a live one, two weeks from now, meaning a rate hike is back on the table.
Since October 6th, the Q’s have lost about $30 from their high near 763. We’re approaching a 5% pullback, and this one looks more like a straight down sale.
My line is 727.79, the QQQ’s 40-day moving average, or its average closing price over the last 40 trading days. It sits within a penny of where the QQQ opened on its last big green day. I’m watching whether that level acts like a magnet if this selling continues.
The next test comes Thursday morning, when Taiwan Semiconductor reports. That is going to be a big one. If it lifts the chip stocks and the QQQ holds 727.79, Wednesday was a one-day rate scare.
Your only option,
Mark Sebastian
P.S. My partner at TradeToClose, Voz, and I trade this market live every day from 3 to 4 p.m. ET at The Close, and the open house is free. Since September 1, our swing trades have 13 winners, 4 losers and 1 scratch.
Stay through the end and you get a $150 credit. Save your seat