Despite starting the year on a strong note, shares of CoreWeave (NASDAQ:CRWV) are down by nearly 13% year-to-date, as of writing. What’s going on with the company? On the one hand, CoreWeave is cashing in on massive demand for artificial intelligence (AI) compute. However, there are several issues with the company, including the massive debt it is now carrying on its balance sheet. That said, CoreWeave recently reported its third-quarter results, and they were full of bullish signs for the company. Let’s dig in.
Image source: Getty Images.
Missed AI’s “Act 1”? Act 2 Could Be 16x Bigger. Most investors think they missed the AI boat because they didn’t buy Nvidia in 2005. But according to our analysts, we’re only at the end of “Act 1″—the R&D phase. “Act 2” is the global rollout. Continue »
The AI tailwind is far from over
The market had high expectations for CoreWeave ahead of its third-quarter earnings, and the neocloud company blew them out of the water. Revenue increased by 168% year over year to $3.7 billion. The top line grew much faster than operating expenses, resulting in strong growth in operating income.
CoreWeave’s operating income for the period was $207 million, substantially better than the $52 million recorded in the year-ago period. Its operating margin also increased to 6%, up from the 4% reported in the prior-year quarter. CoreWeave remains unprofitable, and the net loss per share widened to $1.27 in the period, compared to $0.22 in the prior-year quarter.
However, the fact that CoreWeave’s revenue growth accelerated for the first time in a while suggests there is still strong demand for the company’s services, which helps justify the massive spending contributing to the worsening bottom-line numbers. We can also look at CoreWeave’s revenue backlog, which was $132.5 billion for the period, up 138% year over year.
CoreWeave also raised its guidance for the fiscal year 2026. It now expects revenue between $13 billion and $13.3 billion, up from its previous range of $12.4 billion to $13.2 billion. The company is now also projecting it will finish the year with a revenue run rate of $20 billion to $21 billion; CoreWeave’s trailing-12-month revenue is $9.89 billion. It’s not surprising that the stock soared on the heels of another excellent quarterly performance.
What’s next for CoreWeave?
Can CoreWeave maintain its momentum? The company faces at least three major risks. First, during the recent U.S. midterm elections, voters overwhelmingly elected officials who ran on pumping the brakes on data center expansion. If regulatory uncertainty in the AI industry increases over the next few years, it could weigh on CoreWeave’s financial results.
