CoreWeave Credit Watch

# Aggressive AI Infrastructure Expansion in 2026 Unveils Systemic Credit and Market Risks The rapid, high-stakes buildout of AI infrastructure in 2026—initially hailed as a transformative leap toward technological dominance—has now exposed profound vulnerabilities within the sector and the broader financial ecosystem. What once appeared as a bold stride into the future is increasingly recognized as a looming crisis, driven by excessive leverage, widening credit strains, and mounting contagion risks that threaten to destabilize markets and impede innovation. ## CoreWeave: The Epicenter of Financial Strain At the heart of this unfolding turmoil lies **CoreWeave**, a leading AI processing infrastructure provider that catapulted into the spotlight following an **$11.9 billion five-year contract with OpenAI**. This landmark deal ignited an aggressive expansion strategy, financed predominantly through **borrowing**—notably **convertible notes** and **unsecured bonds**—which propelled its **total debt to approximately $29 billion**, nearly doubling previous levels. This leap in leverage has rendered CoreWeave perilously fragile, especially given its financial metrics. ### Alarming Financial Indicators Recent financial disclosures paint a stark picture: - Despite an impressive **$55 billion backlog of orders**, **cash flow remains insufficient** to service the ballooning debt, raising concerns over liquidity sustainability. - The **Altman Z-Score** has plummeted to around **0.69**, indicating **high insolvency risk**. - Its **credit rating** has been downgraded to **‘B’**, signifying **significant default potential**. - **Credit Default Swap (CDS) spreads** suggest a **greater than 40% probability of default**, highlighting market-implied risks. - The **debt-to-equity ratio** stands at approximately **363%**, underscoring extreme leverage levels. - Market sentiment remains volatile: **CoreWeave’s stock surged 26.3% on March 1, 2026**, fueled by optimism about AI chip manufacturing, but has since declined roughly **50% year-to-date**, reflecting investor skepticism about sector fundamentals. ### Catalyst: Blue Owl Capital’s Financing Setback Adding to the sector’s fragility, **Blue Owl Capital**, a major private credit lender, **failed to secure around $4 billion in financing** needed to support CoreWeave’s ongoing expansion. This failure underscores **widening lending constraints** and **growing skepticism among financiers**, signaling that even large private credit players are retreating amid macroeconomic headwinds. According to **Futu News**, lenders are **becoming increasingly cautious**, reluctant to refinance existing obligations in a tightening credit environment. The inability to secure this critical funding has sparked **social media panic**, with widespread speculation about an imminent sector crisis. ## Critical Earnings and Sector Outlook The **February 26, 2026**, earnings report and investor briefing have been viewed as a pivotal moment: - **Positive disclosures** could **restore investor confidence** and stabilize the sector. - Conversely, **negative surprises** risk **triggering defaults, restructurings, or a sector correction**, which could accelerate financial distress across AI firms. Recent disclosures and earnings call excerpts reveal **mixed results**: - **CoreWeave** reported **weaker-than-expected adjusted metrics** for Q4 2025, with management highlighting **continued strong AI compute demand** but also acknowledging **challenges in securing refinancing**. - The company disclosed it had **secured over $18 billion in debt and equity financing in 2025**, working with more than **200 investment partners**, yet the **risk remains elevated** amid sector-wide stresses. ## Sector-Wide Challenges and Systemic Risks CoreWeave’s distress exemplifies broader vulnerabilities across the AI infrastructure landscape: - **Overvaluation Bubble**: - Many AI firms are trading at **valuation multiples exceeding 400x EV/EBITDA**, driven more by market hype than fundamentals. - **Widening Credit Spreads & Lending Constrictions**: - Sector-wide **credit spreads** have widened to approximately **275 basis points**, reflecting **heightened risk premiums**. - Lenders are **adopting more conservative standards**, making refinancing more difficult. - **Interest Rate Environment**: - Persistently **high interest rates** through 2026 have **inflated debt servicing costs**, further squeezing liquidity. - **Reliance on Collateralized Financing & Derivatives**: - CoreWeave’s recent move to pursue an **$8.5 billion secured loan backed by AI chips and Meta contracts** underscores **sector dependence on collateral from major tech giants**. - The use of **derivatives and structured notes**, such as **UBS Trigger Notes** (which issued **$380,000 in $1,000 denominations**), introduces **trigger risks**; adverse market moves could rapidly escalate losses and cascade defaults. ### Contagion Risks and Smaller Peer Impact Smaller AI firms like **Nebius Group (NASDAQ: NBI)** and **Applied Digital** are experiencing sharp declines, illustrating **spillover effects**: - **Share prices have plunged**, and **credit spreads have widened**, signaling **systemic fragility**. - The sector’s high valuation multiples and reliance on fragile financing structures heighten **default risks** and **liquidity crises**. ## Recent Market Movements and Emerging Risks The sector remains highly volatile: - **CoreWeave’s stock (NASDAQ: CRWV)** saw a brief **4.9% uptick**, driven by speculative trading, but overall remains unstable. - **CDS spreads** and **credit default probabilities** continue to widen, indicating rising **default risks**. - The **widening of credit spreads to about 275 basis points** and **increased derivatives triggers** magnify the potential for rapid contagion. ### The Role of Macro Conditions The macroeconomic environment intensifies these risks: - Elevated **interest rates** increase debt costs. - **Widening credit spreads** reflect investor risk aversion amid uncertain economic signals. - Many AI firms are **overvalued**, with valuations surpassing **400x EV/EBITDA**, creating an **inflated bubble** susceptible to deflation. The **2026 Investment Grade Credit Outlook (N1)** emphasizes that **tightening credit conditions** and **widening spreads** could precipitate **defaults** and **liquidity crunches**, further destabilizing the sector. ## Recent Developments: Secured Financing and Sector Dependency A notable recent development is CoreWeave’s pursuit of an **$8.5 billion secured loan**, backed by **AI chips** and **contracts with Meta**, aiming to **provide liquidity amid market tightening**. - **This collateral-dependent financing** highlights **sector reliance on large tech firms**—a systemic vulnerability if macroeconomic conditions worsen. - While it could **temporarily stabilize CoreWeave**, the move underscores **widening refinancing challenges** and **sector dependence on big tech collateral**. ## Current Status and Future Outlook As of late February 2026, the sector faces **heightened uncertainty**: - **Earnings reports and investor briefings** will be scrutinized for signs of stabilization or further deterioration. - The **widening of CDS and credit spreads** signals **escalating systemic risks**. - The probability of **defaults, restructuring, and liquidity crises** remains high, with potential to **delay AI deployment and slow innovation**. ### Implications and Risks - **Defaults and restructurings** could significantly **disrupt ongoing projects**, impacting industry timelines. - **Market contagion** could extend to **private credit markets** and **smaller firms**, like Nebius and Applied Digital. - The **use of derivatives and structured notes** amplifies **trigger risks**, potentially triggering rapid cascades of defaults if confidence erodes. **Without decisive action—such as enhanced transparency, successful refinancing, macroeconomic stabilization, and prudent risk management—the sector risks a substantial correction**. Such a downturn could **slow AI progress, diminish investor confidence**, and **reshape the industry landscape for years**. --- **In summary**, the aggressive infrastructure expansion in 2026 has uncovered systemic issues—overleveraging, inflated valuations, deteriorating credit conditions, and reliance on collateral from major tech firms. CoreWeave’s precarious financial position, coupled with sector-wide widening credit spreads and derivative risks, signals an increasingly fragile environment. As earnings reports and refinancing efforts unfold, the industry’s fate hangs in the balance—either stabilizing through strategic measures or facing a correction that could significantly alter AI development and market dynamics. The critical imperative remains **prudence, transparency, macroeconomic support**, and **robust risk management** to prevent a broader financial crisis and foster sustainable growth in AI technology.

# Nvidia Deepens Investment in CoreWeave Amid Sector Challenges and Growth Ambitions Nvidia’s recent strategic move to inject an **additional $2 billion into CoreWeave**—raising its total backing to over **$4 billion in the past year**—marks a significant step in its relentless push to dominate AI cloud infrastructure. This increased investment elevates Nvidia’s ownership stake in CoreWeave to approximately **9%**, signaling a desire for **greater strategic influence** over the company's direction. The overarching goal remains ambitious: to **scale CoreWeave’s data center capacity beyond 5 gigawatts (GW)** and develop a **comprehensive ecosystem** capable of supporting a broad range of AI workloads—from large-scale model training and inference to real-time applications in healthcare, autonomous vehicles, finance, and industrial automation. While Nvidia’s confidence and substantial capital commitment underscore its long-term vision, sector-wide headwinds—including financing difficulties, geopolitical tensions, and environmental concerns—are complicating the landscape, potentially affecting the pace and success of this expansion. --- ## Strategic Goals: Hardware Integration and Ecosystem Expansion Nvidia’s **$2 billion investment** is primarily aimed at **accelerating CoreWeave’s infrastructure growth** to meet soaring demand for high-performance compute power. These capabilities are essential for **training expansive AI models, ensuring low-latency inferences, and supporting real-time AI applications** that demand **massive throughput, energy efficiency, and minimal latency**. A key component of Nvidia’s strategy involves **integrating its GPU hardware with innovative processors like the Vera CPU**, a standalone chip designed to **reduce latency and enhance energy efficiency**. This hardware-software convergence aims to **create a unified platform** capable of supporting **edge computing, hyperscale cloud deployments**, and **real-time AI workloads**—further consolidating Nvidia’s leadership position in AI infrastructure. In addition, Nvidia’s increased ownership stake grants it **greater influence over CoreWeave’s strategic decisions**—including **product development, infrastructure deployment, and market positioning**—ensuring that CoreWeave’s growth aligns with Nvidia’s broader ecosystem ambitions. --- ## Financial and Sector-Wide Headwinds ### Financing Challenges and Market Sentiment Despite sector optimism, **CoreWeave’s financial health faces mounting pressures**: - The company **issued approximately $2.2 billion in convertible bonds**, such as **CRWV 9.000% 01Feb2031**, at interest rates as low as **1.75%**. - **Efforts to close a planned ~$4 billion financing round led by Blue Owl Capital** have experienced **delays or setbacks**, raising concerns about liquidity and operational viability. - In recent weeks, **CoreWeave’s stock (CRWV)** has **fallen roughly 12%**, breaching key support levels amid fears of financing delays and broader investor skepticism. ### Sector and Geopolitical Risks CoreWeave’s **estimated debt load of around $29 billion**—including **legal disputes, client concentration risks**, and **geopolitical tensions**—poses significant challenges: - **Export restrictions** on advanced semiconductors from the U.S. and China threaten hardware supply chains, potentially disrupting hardware procurement. - **Legal disputes** and **high client concentration** could lead to revenue volatility. - **Environmental concerns** surrounding the **energy consumption of large data centers** may trigger **regulatory restrictions** or increase operational costs, especially as climate policies tighten globally. ### Broader Market Conditions: Private Credit and Global Tensions The **private credit markets**, which have ballooned to approximately **$3 trillion globally**, are now experiencing a **notable slowdown**. Lenders are **becoming more cautious**, complicating funding avenues for high-growth firms like CoreWeave. An insightful report titled *"From Dimon’s ‘cockroaches’ to the Blue Owl freeze: How stress is spreading in private credit"* highlights **widespread stress** across the sector, which could **delay or derail expansion plans**. --- ## Latest Developments: Earnings, Sector Stress, and Strategic Responses ### Recent Q4/2025 Results and Market Reaction CoreWeave recently reported its **Q4/2025 financial results**, which have added to investor concerns: - The company’s **post-market share** declined about **5%** following mixed or weak adjusted metrics. - Management’s commentary from the earnings call indicated **disclosed around $18 billion in financing activity** during 2025, with ongoing discussions and **uncertainties around demand** for AI compute services. - The results reveal **challenges in capacity utilization** and **client retention**, raising questions about the sustainability of rapid growth. ### Strategic Financial Maneuvers In response to financing headwinds, **CoreWeave is actively pursuing an **$8.5 billion secured loan**, backed by contracts involving Meta**. This move aims to **bolster liquidity** and **support ongoing infrastructure expansion** despite broader credit market stress. The Meta-backed credit line could **mitigate some financing delays**, providing a critical lifeline to sustain growth. ### Sector-Wide Stress Testing CoreWeave’s struggles serve as a **litmus test for the resilience of the AI boom**. Sector-wide liquidity constraints, geopolitical tensions, and overleveraging expose vulnerabilities even among prominent players. An article from TipRanks.com, *"How CoreWeave (CRWV) Became the AI Boom’s Most Expensive Stress Test"*, underscores these financial struggles as emblematic of **broader risks** faced by **overleveraged, rapidly expanding AI infrastructure firms**. ### Outlook: The 2026 Investment Grade Credit Environment The **2026 Investment Grade Credit Outlook** projects a **tightening credit environment**, with **lenders becoming more risk-averse**. This scenario suggests **diminished access to long-term, low-cost financing** for firms like CoreWeave, raising questions about the **sustainability of aggressive expansion plans** and emphasizing the need for **diversified funding sources**. --- ## Market Indicators and Key Metrics to Watch - **CoreWeave’s stock (CRWV)** has declined approximately **12%** amid **fears of financing delays** and **execution risks**. - **Bond markets** exhibit **volatility**, with recent issuance at **low interest rates** but **reluctance from lenders** signaling **heightened risk perception**. - **Progress on the Blue Owl financing deal** and **deployment milestones**—such as **Vera CPU rollout** and **capacity expansions**—will be critical indicators of operational momentum. - **Q1/2026 earnings report**—expected before **February 26, 2025**—will shed light on **revenue growth**, **capacity utilization**, and **client retention**. - **Geopolitical and environmental risks** remain persistent, with potential to **disrupt supply chains** or **increase regulatory costs**. --- ## Current Status and Strategic Implications While Nvidia’s **$2 billion investment** and hardware innovations like the **Vera CPU** position it as a **key enabler of AI cloud growth**, sector-wide challenges could temper progress: - **Failure to close additional financing**, such as the Blue Owl deal, could **delay or limit capacity expansion**. - **Milestones in Vera CPU deployment** and **data center capacity growth** are vital for **maintaining technological and market leadership**. - **Legal, geopolitical, and environmental risks** remain significant, with potential to **increase operational costs** or **disrupt supply chains**. **The coming months** will be pivotal in determining whether CoreWeave can **navigate these headwinds** and **execute its growth strategy effectively**. --- ## Broader Industry and Strategic Outlook CoreWeave’s financial and operational hurdles underscore **wider challenges** faced by **high-growth AI infrastructure companies** that depend heavily on **private credit markets** and **global supply chains**. The **current credit crunch**, combined with **geopolitical tensions**, suggests a **more cautious outlook** for rapid expansion in AI cloud infrastructure. Meanwhile, Nvidia’s **long-term vision**—bolstered by hardware innovations and strategic investments—remains intact. However, **sector stresses and financing delays** highlight the **fragility** of the current growth trajectory. --- ## Final Thoughts Nvidia’s **substantial investment and increased stake** in CoreWeave demonstrate its **commitment to leading the AI cloud revolution**. Yet, **financing headwinds, geopolitical tensions, and operational risks** pose significant hurdles. The **next several months** will be critical in assessing whether CoreWeave can **overcome these challenges** and **reach its ambitious expansion goals**, ultimately shaping Nvidia’s **dominance in AI infrastructure** and influencing industry dynamics. **Stakeholders and industry watchers** should remain **vigilant**—monitoring **market signals, regulatory developments, and geopolitical shifts**—to gauge **CoreWeave’s resilience** and **Nvidia’s strategic positioning** in the evolving AI cloud landscape.

# Oracle’s $50 Billion AI Infrastructure Fund Sparks Broader Sector Challenges Amid Growing Investment and Fragility The race to establish the foundational backbone of artificial intelligence (AI) has intensified dramatically. Oracle’s recent announcement of a **staggering $50 billion capital raise** dedicated solely to AI infrastructure underscores both the sector’s explosive growth and its mounting vulnerabilities. As projections now indicate **over $1 trillion** in AI-related infrastructure investments over the next few years, industry stakeholders find themselves at a critical crossroads—where ambitious expansion risks being undermined by systemic financial fragility, operational challenges, and geopolitical uncertainties. --- ## Oracle’s Strategic Expansion and Sector Momentum Oracle’s bold **$50 billion fund** exemplifies the aggressive push by major technology giants to dominate AI infrastructure. This massive investment aims to strengthen three core areas: - **Data Center Expansion:** Building and upgrading facilities optimized for high-bandwidth, low-latency AI workloads—focusing on **scalability**, **energy efficiency**, and **connectivity**—to support applications such as healthcare diagnostics, autonomous vehicles, and real-time analytics. - **AI Chip Development:** Investing heavily in **next-generation AI accelerators** to **break hardware bottlenecks**, **reduce latency**, and **improve energy efficiency**. Oracle aims to compete with industry leaders like **Nvidia**, **AMD**, and innovative startups racing to meet the demands of increasingly larger models. - **Scaling Cloud AI Services:** Expanding cloud offerings to deliver **more reliable, scalable, and cost-effective AI solutions**, targeting a share of an enterprise AI market projected to reach hundreds of billions annually. **These investments highlight a fundamental reality:** the enormous upfront costs—including hardware procurement, data center construction, and operational expenses like energy and cooling—are primarily manageable for large, well-capitalized firms capable of leveraging economies of scale. --- ## The Sector’s Investment Surge and Emerging Risks Oracle’s fund is part of a broader **investment surge across AI infrastructure**, with estimates suggesting more than **$1 trillion** will flow into this domain in the coming years. Several factors are fueling this trend: - **Intense Global Competition:** Tech giants such as **Amazon Web Services**, **Microsoft**, **Google**, alongside hardware leaders like **Nvidia** and **AMD**, are rapidly expanding capacities via acquisitions, infrastructure buildouts, and strategic alliances to secure AI dominance. - **Debt-Fueled Expansion:** Many firms are relying heavily on **record levels of debt—estimated at around $1 trillion**—to finance infrastructure growth. Notably, **Alphabet** issued a **100-year bond in February 2026**, raising over **$30 billion**. While such long-term bonds reflect sector confidence, they **significantly elevate systemic risks** if market conditions deteriorate. - **Convertible Bond Market Boom:** The issuance of **high-yield convertible bonds related to AI** has surged by **556% year-on-year**, indicating **investor skepticism**, **sector vulnerabilities**, and **distressed credit conditions**. Companies like **CoreWeave** now carry yields as high as **44.5%**, emphasizing sector financial strains. --- ## Recent Signs of Sector Fragility and Financial Strains Despite widespread optimism, recent developments reveal **deepening financial and operational stresses** that threaten sector stability: ### CoreWeave’s Debt and Refinancing Challenges **CoreWeave**, a leading provider of AI hardware infrastructure, faces **$29 billion** in upcoming debt maturities over the next few years. Despite a **$55 billion backlog** of signed contracts, concerns are mounting that this pipeline may be insufficient to meet its debt obligations. Recently, **Morgan Stanley downgraded CoreWeave’s stock by 8%**, citing **execution risks**, **legal challenges**, and **growth uncertainties**. In response, **CoreWeave is actively pursuing an $8.5 billion bank loan**, backed by a **strategic agreement with Meta** (formerly Facebook). This aggressive refinancing effort underscores the **sector’s fragile financial footing**. The company has **lowered its FY25 revenue guidance** to between **$5.05 billion and $5.15 billion**, reflecting operational vulnerabilities. ### Sector Revenue Backlog vs. Debt Maturities Recent reports, including **CoreWeave’s Q4 earnings**, highlight that **the $55 billion revenue backlog** may be **insufficient to cover its upcoming debt maturities**. This **“GPU Debt Wall”** scenario raises fears of **liquidity crises** and potential defaults, which could trigger broader systemic repercussions. Shares of CoreWeave recently traded at **$89.15**, down 12% over the past week, signaling waning investor confidence amid these concerns. ### Blue Owl Capital’s Financing Setback **Blue Owl Capital**, a key financier of infrastructure projects, recently **failed to secure $4 billion** in funding for a crucial data center in Pennsylvania—a vital node in the AI infrastructure network. Reports indicate **lenders expressed reservations**, citing **risk concerns** amid tightening credit conditions. This setback exemplifies **widening difficulties in securing large-scale, high-risk infrastructure financing**, signaling increased caution among financiers. ### Sector Contagion and Market Turbulence The **neocloud sector**, comprising cloud-native AI solutions and infrastructure providers, is experiencing **sharp declines**. Shares in companies like **Nebius Group (NASDAQ: NBI)** and **Applied Digital** have plunged amid broader financing pressures, illustrating **systemic vulnerabilities** that could propagate if left unaddressed. ### External Market and Geopolitical Risks External factors further amplify sector fragility: - **US-China Tensions & Export Controls:** Ongoing trade disputes and **semiconductor export restrictions** threaten supply chains for critical hardware components, likely inflating costs and causing delays. - **Supply Chain Disruptions:** Persistent **disruptions** and insider sales exceeding **$5 billion** heighten operational uncertainties. - **Environmental and Regulatory Pressures:** Data centers, as some of the **largest energy consumers worldwide**, face **mounting regulatory scrutiny**. Governments are adopting **stricter environmental standards**, which could **delay projects** and **increase costs**, tempering growth expectations. --- ## Nvidia’s Expanding Empire and the Capital Race Adding a new dimension, **Nvidia** is aggressively expanding beyond chip manufacturing into **integrated AI cloud services** and **data center solutions**. Initiatives include: - Developing **AI-specific hardware and platforms** to serve cloud providers. - Forming **strategic alliances** with major data center operators. - Investing heavily in **data center infrastructure and software ecosystems** to cement market leadership. This intensifies the **capital and capacity race**, compelling rivals to accelerate their investments. An industry analyst comments, "Nvidia’s vertical integration and ecosystem expansion could reshape the AI infrastructure landscape, forcing competitors to ramp up spending." --- ## Updated Credit and Investment Environment: 2026 Outlook The **2026 Credit Outlook** indicates that **market conditions are approaching a turning point**. Rising risks of **downgrades and defaults** threaten if firms cannot manage their debt loads prudently. The era of **easy access to cheap capital** is waning, and **tightening credit conditions** threaten to expose vulnerabilities in highly leveraged firms. A **notable article**, *"Private Credit's Day of Reckoning May Be Closer Than People Think,"* highlights that **private credit markets are under stress**, with **illiquid assets**, **high leverage**, and **rising default rates** raising alarms about a potential sector-wide correction. **Private debt providers** face increasing scrutiny as defaults and refinancing difficulties mount. This environment underscores the **imperative for firms to adopt prudent financial strategies**, **diversify funding sources**, and **strengthen risk management frameworks** to prevent cascading defaults that could destabilize the AI infrastructure ecosystem. --- ## Supporting Evidence: Market Activity and Sector Reports Recent data underscores the current financial climate: - The **US stock market** has experienced a **historic scramble for bond issuance**, with investors eager to capitalize on the sector’s growth despite underlying risks, reflecting **both optimism and caution**. - **CoreWeave’s Q4 earnings report** shows that, despite a **$55 billion backlog**, the company's **near-term liquidity needs** and **debt maturities** pose substantial risks. Its **revenue guidance downgrade** and ongoing refinancing efforts exemplify **sector fragility**. --- ## Implications and Future Outlook The confluence of **massive capital commitments**, **financial strains**, and external risks paints a complex picture: - **Sustainable Financing:** Firms must prioritize **long-term, prudent funding strategies** to avoid overleveraging and defaults. - **Diversification:** Heavy reliance on **debt—especially high-yield or private credit—raises systemic vulnerability**. Emphasizing **equity financing**, **public funding**, and **strategic partnerships** can boost resilience. - **Enhanced Risk Management:** Increased focus on **legal**, **operational**, and **geopolitical risks** is vital to mitigate shocks. - **Regulatory and Environmental Preparedness:** Proactively addressing **regulatory standards** and **environmental policies** can prevent costly delays and overruns. --- ## Current Status and Implications While **refinancing efforts** like CoreWeave’s pursuit of an **$8.5 billion loan** may provide temporary liquidity, **sector vulnerabilities remain**. The sector’s ability to withstand external shocks, navigate tight credit markets, and manage operational risks will be pivotal. The **AI infrastructure boom**, driven by **visionary investments and technological innovation**, faces a **delicate balancing act**. If managed prudently, it can sustain long-term growth; neglecting warning signs risks correction, defaults, and broader instability. **Oracle’s $50 billion fund** exemplifies the sector’s **ambitious drive**, but recent developments—including **CoreWeave’s debt challenges**, **Blue Owl Capital’s financing setback**, and signs of **market contagion**—highlight the need for **financial discipline**, **risk oversight**, and **strategic caution**. As the **competition for AI infrastructure leadership** intensifies, the industry’s future hinges not only on technological breakthroughs but equally on **sound financial management** and **resilient strategic planning**. How stakeholders respond in these critical months will determine whether the sector matures into a **robust, sustainable ecosystem** or faces correction amid mounting fragility.