CoreWeave stock falls 40% from high despite 112% revenue growth

CoreWeave Inc. shares have slid more than 40 percent from their year-to-date high, trading at $82 in their lowest level since Aug. 3, even as the AI cloud provider posts revenue growth that more than doubled in its latest quarter. The pullback leaves the stock roughly 24 percent below the $107.73 close it reached Aug. 12, when the company reported second-quarter results that sent shares up 19 percent.

"The market is repricing the balance between CoreWeave's contracted backlog and the cost of financing it," said Gabriela Borges, an analyst at Goldman Sachs, who raised her price target on the stock to $139 from $121 while keeping a Neutral rating. She cited demand outpacing supply, firm GPU pricing across generations, and a credible path to higher margins as capacity comes online.

CoreWeave posted revenue of $2.575 billion in the second quarter, up 112 percent from a year earlier, with adjusted EBITDA of $1.510 billion and a 59 percent margin. The company holds a $104 billion contracted revenue backlog and has expanded active power capacity beyond 1.5 gigawatts, backed by $679 million in positive operating cash flow. Partnerships with Hudson River Trading and Rescale have extended its platform beyond raw compute into higher-value services built on Nvidia's Vera Rubin platform with Spectrum-X Ethernet networking.

The bear case centers on leverage. Total debt reached $35.1 billion, with quarterly net interest expense of $640 million, and property and equipment purchases of $6.42 billion in the quarter kept free cash flow deeply negative. Operating expenses rose 120 percent to $2.624 billion, pushing the company to a GAAP operating loss of $49 million and a widened net loss of $626 million, or $1.14 per share. Operating margin turned negative at minus 2 percent as cost of revenue and technology expenses grew faster than sales.

Debt Load Tests the AI Cloud Trade

CoreWeave's valuation disconnect mirrors a broader question hanging over the AI infrastructure complex. The stock's 40 percent drawdown comes as investors weigh whether hyperscale capital spending can sustain the pace of buildout that Nvidia, Super Micro Computer, and Nebius Group have ridden higher. Nvidia, whose GPUs power CoreWeave's clusters, added roughly $159 billion in market value on Aug. 12 as AI demand held firm, while Nebius jumped 34 percent after reporting 454 percent revenue growth.

For CoreWeave, the math turns on whether its $104 billion backlog converts to cash faster than its interest bill compounds. The company guided to $25 billion in third-quarter commitments, but its debt-funded expansion leaves it exposed to refinancing risk if credit conditions tighten. Goldman's Borges sees a path to margin expansion as capacity utilization rises, yet the stock's slide suggests investors are demanding proof that operating leverage will outpace the $640 million quarterly interest expense.

The next test comes as CoreWeave scales its NVIDIA Vera Rubin deployments for customers including Hudson River Trading, whose AI-driven trading research will run on the platform. Whether that demand translates into sustainable profitability — and whether the market re-rates the stock toward the $139 target or keeps it pinned near $82 — will hinge on the company's ability to narrow its operating loss while servicing $35.1 billion of debt.

This article is for informational purposes only and does not constitute investment advice.