Two years ago, CoreWeave was a private neocloud data-center operator with less than $2 billion in annual revenue. Now it is at the center of an artificial-intelligence trade that seems to be growing shakier by the day.
CoreWeave stock was down 2.4% to $64.18 on Thursday. Assuming those results hold, shares will have fallen for four consecutive sessions, tumbling a cumulative 22%. The move has shaken other data center and AI stocks, and has been compounded by Anthropic releasing disappointing quarterly revenue numbers this week that suggest the rampant growth that has defined the sector in recent years may be slowing.
Few if any companies of CoreWeave's size -- its market capitalization is roughly $35 billion -- are so closely tied to the future of AI compute demand and the costs of meeting that demand right now. That dynamic makes the stock a bellwether for investor sentiment about the broader AI investment boom.
CoreWeave works with third-party developers to build data centers, equip them with the latest Nvidia hardware, and lease them to customers. It also has a software platform for running AI models and agents. The company plans to power at least 8 gigawatts of cloud capacity by 2030, up from 1.5 gigawatts today.
"CoreWeave's ability to deploy active power remains one of its most important competitive advantages," Tal Liani, an analyst at BofA Securities, wrote in a research note Thursday.
In part because of CoreWeave's speed, large cloud hyperscalers like Meta Platforms and Alphabet's Google lease capacity from the neocloud company as an overflow alternative to their own facilities. But speed is expensive: Analysts expect CoreWeave's capital expenditures to exceed $50 billion a year from 2027 through 2030.
An initial public offering in March 2025 raised $1.5 billion. Nvidia then took a $2 trillion stake in CoreWeave in January. CoreWeave also issues convertible securities and sells long-term debt at yields as high as 9.75%. Yields skyrocketed into the teens on the secondary market this week, indicating that credit investors are skeptical that CoreWeave's revenue can cover its investments.
For its part, CoreWeave has consistently argued that fully committed future revenue covers its financing costs. But with debt becoming more expensive, some investors are asking where additional funding will come from and whether CoreWeave's growth is sustainable.
"We structure the majority of our financing so that cash flows from customer contracts repay the associated debt and generate additional free cash flow," a CoreWeave spokesperson said Wednesday. "The contracted backlog will fully support repaying all of the secured debt but also the unsecured parent level debt without requiring any customer contract renewal or re-leasing of the collateral."
As those existing contracts lapse, there is every chance that AI demand continues to ramp up and that CoreWeave can use cheap, creative financing to service that demand. On Wednesday, co-founder Brannin McBee told the Financial Times that the company would look to tap insurance capital.
Nvidia may also step in to help, whether by making additional investments in CoreWeave, guaranteeing its debt, or taking other steps to shore up the neocloud's position and reassure the market. However, Nvidia CEO Jensen Huang said this week that there's no need to backstop CoreWeave because its financial strength is improving and its cost of capital is "actually decreasing."
But the market clearly thinks CoreWeave's cloud model is riskier than that of companies with bigger balance sheets, higher credit ratings, and a wider array of revenue streams.
According to Daniel O'Regan, managing director at Mizuho Securities, investors responded to McBee's comments by asking, "Does this mean they've already exhausted the traditional pools of capital like debt and equity?"
If there is a silver lining in this week's selloff, it is that CoreWeave stock is now cheaper for investors banking on the economics of its AI buildout.
Brad Zelnick, an analyst at Deutsche Bank, called the pullback a "buying opportunity" in a note Wednesday, arguing that the company is scaling responsibly when some of its peers are struggling to do so.
CoreWeave now trades at about 1.5 times projected sales over the next 12 months, down from 2.9 times sales at the start of the year. That is below fellow neoclouds like Nebius Group, at a 4.7 times multiple, and IREN at 2.7 times.
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