CoreWeave Stock Performance Plunges 56% as CEO Defends AI Infrastructure Strategy Amid Bubble Fears

Coreweave CEO defends AI circular deals as 'working together' | TechCrunch

It's been quite the year for Coreweave. In March, the AI cloud infrastructure provider went public in one of the biggest and most anticipated IPOs of the year that didn't live up to its hype. Another setback took place in October, when a planned acquisition of the cloud provider's business partner, Core Scientific, faltered due to skepticism from the acquisition target's shareholders. In the meantime, the firm has acquired a number of different companies, its stock has gone up and down, and it's been both criticized and lauded for its role in the booming AI data center market. In an interview at Fortune's AI Brainstorm summit in San Francisco on Tuesday, Coreweave's co-founder and CEO, Michael Intrator, defended his company's performance from critics, noting that it was in the midst of creating a "new business model" for how cloud computing can be built and run. Their collection of Nvidia GPUs is so valuable, they borrow against it to help finance their business. The executive seemed to imply: If you're charting a new path, you're destined to encounter some road bumps along the way. "I think people are myopic a lot of times," Intrator said, when questioned about his company's occasionally unstable stock price. "Yes, it is see-sawing," he admitted, while noting that the Coreweave IPO took place not long before President Trump's tariffs went into effect -- a notably uncertain moment for the overall economy. "We came out into one of the most challenging environments, right around Liberation Day and, in spite of the incredible headwinds, were able to launch a successful IPO," the CEO told Brainstorm editorial director Andrew Nusca. "I couldn't be prouder of what the company has accomplished," he added. Coreweave's stock may have debuted amidst the economic doldrums of March but its price has gone on quite the journey since then. It debuted at $40 and, over the past eight months, has climbed to well over $150, but currently rests at around $90. Its more wary critics have compared it to a meme stock due to its penchant for going up and down. Some of the uncertainty around Coreweave's stock has been credited to the company's hefty level of debt. Not long after Coreweave announced a deal on Monday to issue even more debt to finance its data center buildout, its stock dropped some 8 percent. Intrator seems to see his company as a disruptor, one whose unconventional tactics may take some getting used to. "When you introduce a new model, when you introduce a new way of doing business, when you disrupt what has been a static environment, it's going to take some people some time," he said, during his appearance Tuesday. Coreweave actually started its corporate life as a crypto-miner but, in short order, built itself into a pivotal provider of "AI infrastructure" to some of the tech industry's most major players. In that role, it provides GPUs to AI developers, and has made major partnerships with Microsoft, OpenAI, Nvidia, Meta, and other tech titans. Another topic broached Tuesday was the notion of "circularity" within the AI industry. "Circular" business deals, in which a small number of powerful AI companies invest in one another, have frequently been criticized, and have raised questions about the industry's long term economic stability. Perhaps not surprisingly, since Nvidia is one of its investors as well as its supplier of GPUs, Intrator swatted away such concerns. "Companies are trying to address a violent change in supply and demand," he said. "You do that by working together." Since the IPO, Coreweave has continued to make efforts to expand its business. After it acquired Weights and Balances, an AI developer platform, in March, it went on to acquire OpenPipe, a startup that helps companies create and deploy AI agents through reinforcement learning. In October, it also made deals to acquire Marimo (the creator of an open source notebook) and Monolith, another AI company. It also recently announced an expansion of its cloud partnership with OpenAI and said it has plans to move into the federal market, where it wants to provide cloud infrastructure to U.S. government agencies and the defense industrial base.

CoreWeave Has Lost a Staggering Amount of Stock Value Over the Past Six Months

AI cloud computing company CoreWave exploded onto the scene in March with the biggest tech IPO since 2021. The company's stock soared by more than 40 percent in the following days, riding on the coattails of immense hype surrounding generative AI. The hype was driven by insatiable AI companies like Microsoft, OpenAI, and Meta leasing hundreds of megawatts of compute as outfits like CoreWeave construct enormous data centers. If AI chipmaker Nvidia is the one selling shovels during the ongoing AI gold rush, in other words, CoreWeave is the one buying those shovels in bulk and leasing access to the digging sites. But persistent fears of an AI bubble have put a massive damper on investor enthusiasm, leaving many to wonder whether CoreWeave could be the canary in the coalmine -- and even drawing comparisons to Enron, a company with an extremely speculative valuation that imploded following a major accounting scandal in 2001. As the Wall Street Journal reports, CoreWeave's share price has plunged 46 percent in just six weeks, with $33 billion of value going up in smoke. At press time, shares are hovering at just under $70, meaning the company has lost a staggering 56 percent of its stock value in just six months. It may well be a sign that investors are jittery that the enormous spending by the likes of CoreWeave may not be justified in the long run. Even AI leaders have warned that a return may still be many years out, with OpenAI admitting last month that it won't make any money until at least 2030. It doesn't take much reading between the lines to understand why they're nervous. Taking on an enormous amount of high-interest debt to construct and lease AI data centers leaves the firm with a considerable degree of risk, potentially putting it first on the chopping block in case the AI bubble were to implode. Its operations are also meeting some major headwinds, both literally and figuratively. Rainstorms in Texas forced the company to delay the pouring of a foundation for an AI data center complex, pushing back the completion date by months, the WSJ reports. Investors have also balked at circular financing arrangements in the sector. For instance, Nvidia owns six percent of the company's shares, while CoreWeave has signed an exclusivity contract with the AI chipmaker to only use its GPUs. Microsoft represented 62 percent of CoreWeave's 2024 revenue, as the Wall Street Journal pointed out last month, and is also a major shareholder of CoreWeave's top customer, OpenAI. Then there's CoreWeave CEO Michael Intrator, who downplayed those fears last month. "If you're building something that accelerates the economy and has fundamental value to the world, the world will find ways to finance an enormous amount of business," he said at a Wall Street Journal event in early November. Days after downplaying concerns over an AI bubble, Intrator was probed by investors during a quarterly earnings call about the delays at the Texas data center construction site. He argued that "there are 32 data centers in our portfolio," and that "this one data center will catch up, and then we will move forward from there." As per the WSJ, the company's CFO, Nitin Agrawal, was forced to intervene and clarify that there were delays plaguing several data centers for a single "data center provider." Investors are also concerned that the enormous amount of debt being taken on could compound significantly due to supply chain bottlenecks. Delays may not sound like a big deal in the grand scheme of things, but considering how much money and interest are on the line, an enormous amount of pressure is on CoreWeave to deliver some good news. "The bull case is that they'll scale into it, and that a lot of companies have low margins to start, but this is a company at scale," DA Davidson analyst Gil Luria told the WSJ. "There is no scaling going on here."

CoreWeave CEO: Despite see-sawing stock, IPO was 'incredibly successful' after challenges of Liberation Day tariff timing | Fortune

"When you introduce new models, introduce a new way of doing business, disrupt what has been a static environment, it's going to take some people some time," Intrator said Tuesday at Fortune's Brainstorm AI conference in San Francisco. But, he added, more people are beginning to understand the CoreWeave's business model. "We came out into one of the most challenging environments," Intrator said of CoreWeave's March IPO, which occurred very close to President Trump's "Liberation Day" tariffs in April. "In spite of the incredible headwinds, we're able to launch a successful IPO." CoreWeave, which priced its IPO at $40 per share, has experienced frequent severe up-and-down price swings in the eight months since its public market debut. At its closing price of $90.66 on Tuesday, the stock remains well above its IPO price. As Fortune reported last month, CoreWeave's rapid rise has been fueled by an aggressive, debt-heavy strategy to stand up data centers at unprecedented speed for AI customers. And for now, the bet is still paying off. In its third-quarter results released in November, the company said its revenue backlog nearly doubled in a single quarter -- to $55.6 billion from $30 billion -- reflecting long-term commitments from marquee clients including Meta, OpenAI, and French AI startup Poolside. Both earnings and revenue came in ahead of Wall Street expectations. But the numbers were not all celebratory. CoreWeave disclosed a further increase in the debt it has taken on to finance its expansion, and it revised its full-year revenue outlook downward -- suggesting that, even with historic demand in the pipeline. With media headlines calling CoreWeave a "ticking time bomb," with critics calling out insider stock sales, circular financing accusations and an overreliance on Nvidia, Intrator was asked whether he felt CoreWeave was misunderstood. "Look, we built a company that is challenging one of the most stable businesses that exist -- that cloud business, these three massive players," he said, referring to AWS, Microsoft Azure and Google Cloud. I feel like it's incumbent on CoreWeave to introduce a new business model on how the cloud is going to be built and run. And that's what we're doing." He repeatedly framed CoreWeave not as a GPU reseller or traditional data-center operator but as a company purpose-built from scratch to deliver high-performance, parallelized computing for AI workloads. That focus, he said, means designing proprietary software that orchestrates GPUs, building and colocating its own infrastructure, and moving "up the stack" through acquisitions such as Weights & Biases and OpenPipe. Intrator also defended the company's debt strategy, saying CoreWeave is effectively inventing a new financing model for AI infrastructure. He pointed to the company's ability to repurpose power sources, rapidly deploy capacity, and finance large-scale clusters as proof it is solving problems incumbents never had to face. "When I look back at history of the company, it took us a year with with a company investor like Fidelity, before they were like, 'Oh, I get it,'" he said. "So look, we've been public for eight months. I couldn't be prouder of what the company has accomplished."