CoreWeave down 46% in a month and Blue Owl under pressure — is the AI financing bubble starting to crack?

Summary

CoreWeave has fallen 46% in a month, hitting a $36 billion market cap after Situational Awareness, the AI infrastructure hedge fund founded by former OpenAI researcher Leopold Aschenbrenner, deployed a $500 million position in early October. Nvidia is up 30% over six months by comparison. CoreWeave also failed to acquire Core Scientific, which has dropped 24% in the same period.

The divergence matters because CoreWeave is arguably the single most indexed bet on the AI infrastructure wave, yet the broader market shows no sign of correction. Either the company hit company-specific headwinds or the market overheated on the name.

Situational Awareness rotated into other bets. The fund added positions in Western Digital (up 25% past month), Seagate (up 14%), and Lumentum Holdings (up 46%), alongside existing holdings in CRZ, iron, and new positions in miners. The portfolio value doubled from $2.12 billion to $4.15 billion, driven partly by $1.5 billion in new capital and partly by $700 million in unrealized gains. The thesis appears to be that while hyperscalers have unloaded risk onto the neoclouds, the real margins sit in power infrastructure, storage, and cooling components.

Blue Owl's reckoning

The $295 billion alternative asset manager is forcing a merger that will cost investors roughly 20% in haircuts. Blue Owl Capital Corporation 2, a $1 billion private credit fund, is being merged into Blue Owl's publicly traded OBDC fund, which manages $17 billion. OBDC trades at a 20% discount to its stated net asset value, and BCC2 investors are being asked to exchange shares at the stated NAV of both funds, meaning they absorb the gap. The framing is improved liquidity, but the underlying story is redemption pressure. BCC2 saw $150 million in redemptions in the first nine months of 2025, a 20% increase from the same period last year, with Q3 redemptions nearly doubling to $60 million or 6% of net asset value.

Broader skepticism about private credit valuations is driving the move. Publicly listed private credit funds have sold off on concerns that the valuations underlying these vehicles do not match reality. CFO Jonathan Lamb acknowledged investors could face potential haircuts but argued the merger offers exposure to more liquid shares. If shareholders reject the deal, BCC2 could be forced to restrict redemptions entirely.

Blue Owl itself has sold off 16% in the past month despite unprecedented demand for AI infrastructure financing. The firm underwrote a $14 billion financing package for an Oracle and OpenAI data center in Abilene, Texas and raised approximately $30 billion for Meta's AI data center in Louisiana, with Blue Owl committing $3 billion of client capital and borrowing the rest. That Meta deal included an unusual provision giving Blue Owl's equity investment a debt-like guarantee in case the partnership fails.

Aligned incentives

Tech companies will fund $1.4 trillion of an estimated $2.9 trillion in data center spending over the next three to four years. Private credit will cover $800 billion, private equity $350 billion, corporate bonds $200 billion, and asset-backed securitization $150 billion. On the surface this looks healthy and diversified. But Goldman Sachs CEO David Solomon warned of AI-fueled froth and subsequently launched a new AI infrastructure financing team, revealing the core tension: everyone with capital knows the math is speculative, but everyone is also being paid too well to question it.

David Einhorn's Greenlight Capital outlined the mechanics in a recent letter. A consumer pays $1 for ChatGPT. OpenAI spends $2 on Microsoft infrastructure. Microsoft spends $1.20 on CoreWeave GPUs. CoreWeave spends $2.40 on Nvidia chips and another $2.40 on power. The math does not work unless the end user will pay any amount to access the service. Einhorn's point: on the West Coast, the AI labs and their investors are incentivized to keep the narrative going. On the East Coast, Wall Street is getting paid to do the same thing. Both centers of power have aligned interests in sustaining belief.

Where the risk sits

Retail is largely absent from this cycle, unlike the 2017 crypto bubble or the NFT frenzy. That eliminates the sudden synchronized sell signal. But it also means the unwind, if it comes, will be driven by insurance companies, pension funds, and large institutions reassessing returns on capital they have already committed. If tech companies absorb writedowns within their operating cash flows, the dominoes will not fall in rapid sequence. If they cannot, or if capital rationing hits simultaneously across multiple lenders, the spaced-out dominoes become adjacent. The financing structure is sophisticated enough to absorb idiosyncratic losses. It is not necessarily robust against a coordinated loss of faith.