CoreWeave stock is having another tough day, bringing its weekly decline to 25%.

Part of the problem for the company is that it relies primarily on debt to finance its data centers and the Nvidia chips it installs in them. As of June, the cloud company's unsecured notes had a "B" rating from S&P Global Ratings, putting them solidly in junk territory. In its most recent quarterly filing, CoreWeave listed $35.6 billion in total debt on its balance sheet, plus billions more in lease obligations with data center landlords.

"They kind of represent the subprime tranche of the AI trade," said Gil Luria, a tech analyst at D.A. Davidson who has been critical of CoreWeave's debt-fueled business model.

Luria points to the company's most recent results, which included adjusted operating income of $128 million for the quarter, which implies $512 million in annual adjusted income. He compares that figure to CoreWeave's $46.7 billion in net assets in property and equipment, a figure that represented how much capital the company has invested in AI infrastructure.

Taken together, the two numbers imply a 1% return on invested capital. Given that CoreWeave is borrowing at interest rates of 9% or higher to finance its investments, income would have to improve dramatically for banks to remain comfortable lending to CoreWeave, Luria argues.