Geoffrey Seiler, The Motley Fool
5 min read
Neocloud stocks have seen considerable pressure this year, but CoreWeave (NASDAQ:CRWV) just gave investors something to cheer about when it reported its third-quarter results. The sector has been hit with a trio of headwinds in 2026, which is why it may not be a good idea to chase the current rally.
First, the group was hit with questions about how the space will finance the current build-out, especially as interest rates have begun to rise. Second, IT consultant Gartner predicted that 80% of neoclouds would cease independent operations by 2030, as artificial intelligence (AI) revenue would not support the build-out and, with high financing costs, they would not generate sufficient returns on investment. Finally, midterm elections saw many anti-data center candidates win office and quickly call for a data center moratorium and tougher permitting requirements.
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Going into its earnings report, CoreWeave shares were down 32% year-to-date and 65% from their 52-week high. Let’s dig into the artificial intelligence infrastructure provider’s Q3 results to see whether the rally can continue or if this is a good time to sell.
Surging revenue and backlog
CoreWeave has become one of the top neocloud providers, and that showed up in its Q3 results. The company’s revenue surged 168% from $1.37 billion a year ago to $3.66 billion. That came in ahead of the $3.55 billion analyst consensus, as compiled by LSEG.
CoreWeave also raised its full-year revenue guidance, taking it to a range of $13 billion to $13.3 billion, as it expects more than 1.85 gigawatts (GW) of active power by year-end. It is projecting to end the year with run rate revenue of between $20 billion and $21 billion. The company’s previous guidance was for full-year revenue of $12.4 billion to $13.2 billion, with a year-end annualized revenue run rate of $18.5 billion to $19.5 billion.
The company’s backlog, meanwhile, rose 138% year over year to a record $132.5 billion. It currently has $9.3 billion in construction in progress and reduced its cost of debt by 250 basis points to 7.9%. CoreWeave has been working to lower its debt costs, despite higher interest rates, by paying down expensive early-stage debt and replacing it with secured loans and customer prepayments. It expects to receive $9 billion in customer prepayments within the next three months.
