CoreWeave's Rapid Growth in AI Computing Raises Both Excitement and Concerns

CoreWeave Traders Emboldened by AI Spending Ahead of Earnings

The race to build computing capacity for artificial intelligence is reviving bullish bets on one of Wall Street's most contentious stocks: CoreWeave Inc. Shares of the computing-services provider have rallied 35% in less than two weeks, soaring after Microsoft Corp., CoreWeave's biggest customer, said it plans to step up investments in AI infrastructure. Microsoft's spending alleviated concerns that the run-up in the stock was outpacing CoreWeave's outlook for growth. The shares are down 24% from a June peak, but remain up almost 250% since the company's initial public offering in March.

CoreWeave stock rises fast with AI growth and Microsoft support, but faces risks from share sales and big deal

CoreWeave Inc., a computing-services company, is gaining attention because of the growing demand for artificial intelligence (AI) computing power. Its shares jumped 35% in less than two weeks by Monday's close, following Microsoft's announcement to increase spending on AI infrastructure. Microsoft is CoreWeave's biggest customer, and its investment helped ease worries that CoreWeave's stock price was rising too fast compared to the company's actual growth. On Tuesday, CoreWeave's shares continued to rise, gaining up to 2.9%. Tejas Dessai, director of research at Global X ETFs, said the situation is very positive for CoreWeave, noting that the AI business is growing quickly, as per the report by Bloomberg. Wall Street expects CoreWeave to report $1.1 billion in revenue for the second quarter, which is 174% higher than the same period last year. Despite growing revenue, CoreWeave is not yet profitable and is expected to lose 19 cents per share in this quarter. This is worse than a 2-cent loss a year ago but better than a 60-cent loss in the first quarter, as per the reports. CoreWeave's market value rose from under $20 billion at its IPO to nearly $90 billion in June but has dropped over 20% since then. Still, the stock is up about 250% since March's IPO. The company is not expected to be profitable on an adjusted basis until late 2026. Its stock price is high compared to sales, trading at 7.5 times estimated sales, while the Nasdaq 100 trades at 5.6 times estimated sales, as stated by Bloomberg report. ALSO READ: Danielle Spencer net worth 2025: How much was the 'What's Happening!!' Star Worth at her death? Due to its high valuation, many investors are betting against CoreWeave's stock. Over one-third of its available shares are sold short, meaning investors expect the price to fall. Large tech companies like Google, Amazon, and Meta are increasing their spending on computing infrastructure, which could benefit CoreWeave. Alphabet recently raised its capital spending forecast for 2025 by $10 billion to $85 billion. The top four tech companies plan to spend about $350 billion combined this fiscal year. Citigroup raised CoreWeave's stock rating from neutral to buy on July 31, citing rising AI demand across the industry. Analyst Tyler Radke expects CoreWeave to beat second-quarter revenue estimates, according to the report by Bloomberg. However, Radke is an outlier; out of 24 analysts tracked by Bloomberg, only five recommend buying CoreWeave, 16 suggest holding, and three advise selling. CoreWeave is planning to acquire Core Scientific Inc., a data-center operator, in a $9 billion all-stock deal. This raised concerns about share dilution and the stock's high valuation, says reports. Analysts lowered their ratings after the acquisition was announced in July. A share lockup expiration on August 15 could allow investors holding over 80% of Class A shares to sell their shares, which might cause short-term selling pressure. Larry Tentarelli, founder of Blue Chip Daily and a long-term bull on CoreWeave, said the stock is difficult to understand and volatile because it is still new on the market, as mentioned in the report by Bloomberg. ALSO READ: Controversial Sydney Sweeney ad backlash sends American Eagle foot traffic plummeting Other tech news includes China advising companies not to use Nvidia's H20 processors, affecting Nvidia's sales in China. US President Donald Trump indicated he might allow Nvidia to sell a limited version of its advanced AI chip to China. Elon Musk criticized Apple's App Store, accusing it of favoring OpenAI, as per reports. SoftBank Group's shares rose 8% due to optimism about its focus on AI. Micron Technology raised its revenue and earnings forecast for the fiscal fourth quarter, helped by better pricing for key products. CoreWeave is scheduled to report second-quarter earnings on Tuesday afternoon, as per the report by Bloomberg. Q1. Why is CoreWeave's stock price rising quickly? CoreWeave's stock is rising because of strong AI demand, Microsoft's big investment, and increased spending by major tech companies. Q2. What risks does CoreWeave face with its stock? CoreWeave faces risks from possible share dilution due to a $9 billion deal and many investors selling shares soon.

CoreWeave (CRWV) Q2 Earnings: 3 Must-Know Numbers for this Nvidia Partner | The Motley Fool

Spending on artificial intelligence (AI) data centers is staggering. This year, just four companies are on track to spend more than $350 billion and are set to spend at least $400 billion in 2026. To put that into perspective, adjusted for inflation, the entire Apollo program -- which put humans on the Moon -- spent less than $300 billion over 10 years. CoreWeave (CRWV -4.56%) is right in the middle of this data center boom, buying Nvidia's top chips and renting them out to companies like Microsoft. The opportunity here is massive, but so is the risk, as the company continues to fuel its growth with debt. The company fills the substantial gap that exists between demand for AI computing power and current supply. It's what has led CoreWeave's top line to explode, up more than 200% year over year as of its second-quarter report. The jump from under $400 million in Q2 2024 to more than $1.21 billion in Q2 2025 is incredible, but can it continue? The $30.1 billion in backlog sure makes it seem so, at least for the foreseeable future. That's $30.1 billion in sales lined up so long as the company follows through on its commitments and can build out the capacity needed to fill those orders. There's a wrinkle here, however. While the $30.1 billion is a significant increase from last quarter's $25.9 billion, the company had already announced a $4 billion deal with OpenAI in its last earnings that accounted for the bulk of the quarter-over-quarter jump. CoreWeave only booked $1.4 billion in new contracts this quarter -- not as much as might have been expected. The company spent $2.9 billion in capital expenditures (capex) in Q2, the bulk of which went toward purchasing Nvidia's hyper-advanced data center chips as it tries to meet the demand. Management has to make sure that it spends cash now to have chips available when customers need it; as best it can, it needs to anticipate demand, but it doesn't want to overspend if it can avoid it -- these chips aren't cheap. That makes capex a useful indicator of where the company thinks that demand will be in the future. And while a record-setting capex would seem at first blush to mean all is good, the $2.9 billion was actually lower than Wall Street expected and could indicate demand is not as strong as hoped. In order to scale at its lightning-fast pace, the company is making use of debt -- a lot of it. In Q2, the company's total debt reached more than $11 billion, and analysts believe it could add another $10 billion by year-end. Just to service the interest on this debt, the company paid nearly $270 million in the second quarter. That's extremely high. In fact, CoreWeave paid more than 13 times its operating income just to cover the interest on its debt. And if it indeed adds another $10 billion to its debt load before 2025 is done, that multiple could be even worse. And while many companies effectively leverage debt to scale, the assets the company is buying with this debt don't have that long a useful life. These aren't loans for a gas pipeline that will last decades. These are high-interest loans for chips with shelf lives of a few years. CoreWeave's growth is built on too rocky a foundation for my taste. While the blistering pace and massive backlog are reassuring in the near term, there are already some cracks. But relying on high-interest debt to play the middleman in AI doesn't seem like a long-term winning strategy to me. There will likely come a time when the Microsofts of the world prefer to cut out the middle man and drive down their own margins. And even if that doesn't happen, if AI demand cools even slightly, CoreWeave could be left out to dry, given its reliance on high-interest debt. I would avoid CoreWeave stock.

CoreWeave Q2: Mispriced... But A Breakout Is Coming (NASDAQ:CRWV)

I rate CRWV a cautious Buy due to its expanding market share, strong revenue momentum, and unique GPU-focused cloud model. CoreWeave, Inc. (NASDAQ:CRWV) is one of the hottest AI stocks in 2025 that you have never heard of. The company released its Q2 financials, which confirms a spread between perception and reality. Despite a 206% YoY Rick is a Wall Street Journal best-selling author with over 20 years of experience trading stocks and options. The most authoritative publications, including Good Morning America, Washington Post, Yahoo Finance, MSN, Business Insider, NBC, FOX, CBS, and ABC News, cover his work. His passion is business, and he works tirelessly to deliver content in an easy-to-understand manner. In 2018, Rick wrote The Financially Independent Millennial to inspire his readers with his story about becoming financially independent at age 35 despite not learning about money when he was younger. His books are easy to read and often refer to key points that "He would tell his younger self." When not thinking about business, Rick writes (mainly about cruise ship travel) for his travel blog and is an enthusiast of fast cars, technology, & cooking. Analyst's Disclosure:I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.