CoreWeave: An AI Cloud Platform with High Potential and Risks
Recent initial public offerings (IPOs) like Reddit (NYSE: RDDT) and Tempus AI (NASDAQ: TEM) have gained attention for their strong performance. However, CoreWeave (NASDAQ: CRWV) has emerged as a prominent company in 2025, notably due to its connections with NVIDIA (NASDAQ: NVDA), the leading semiconductor company which owns about 6% of CoreWeave’s shares. Although CoreWeave’s stock faced initial challenges, it has seen substantial improvement, rising approximately 34% as of the May 7 close.
Despite the excitement surrounding its NVIDIA ties, investors need to understand: What exactly does CoreWeave do, and what should they anticipate moving forward? The following analysis addresses these significant questions.
CoreWeave’s Mission: Delivering AI Infrastructure Quickly
The concept of “AI cloud infrastructure” may seem complex, but CoreWeave’s operations are straightforward. The company has secured around 250,000 NVIDIA graphics processing units (GPUs), which are vital for training advanced AI models. CoreWeave rents these GPUs to firms focused on AI model development.
This approach mirrors that of established players like Microsoft (NASDAQ: MSFT), which offers an Azure cloud business. However, CoreWeave distinguishes itself by focusing solely on AI computing power, unlike competitors that cater to both AI and traditional computing needs.
A cornerstone of CoreWeave’s strategy is its quick access to the latest GPUs. According to its S-1 registration filing, the company emphasizes, “Our success is dependent on our ability to sustain innovation and technology leadership to maintain the competitive advantage of our solution and to bring the latest GPUs to market faster than our competition.”
For CoreWeave’s clients, timely access to cutting-edge GPUs is crucial, enabling faster and cost-effective development of enhanced AI models. Given the ongoing demand for GPUs, supply shortages can be a challenge.
CoreWeave’s strong relationship with NVIDIA allows it to navigate these challenges effectively.
Additionally, CoreWeave enhances its customer offerings through its proprietary software stack, which assists in managing and optimizing the rented computing resources. Ultimately, this strategy aims to maximize efficiency in training and delivering AI models.
CoreWeave’s Financials: Strong Demand Amid Losses and Debt
CoreWeave’s financial performance shows strong customer interest. In 2024, the company achieved an impressive revenue growth of 737% and operated with a 19% adjusted operating margin.
Moreover, the company boasts around $15 billion in remaining performance obligations, indicating substantial potential revenue—about eight times its 2024 revenue. However, the company remains deeply unprofitable, reporting a net income of approximately -$863 million in 2024.
This financial struggle is largely attributed to a significant debt burden of almost $8 billion, which required $360 million in interest payments in 2024. CoreWeave’s financial strategy includes increasing its debt load, as it recently extended its revolving credit facility to $1.5 billion. Negative cash flow has also been a concern, with nearly -$6 billion in free cash flow in 2024, largely due to capital expenditures of $8.7 billion for GPUs and related infrastructure.
Additionally, the company’s three founders sold off nearly $500 million worth of their shares before the IPO, which may raise eyebrows about internal confidence in the company’s trajectory.
CoreWeave: A Company to Monitor Closely
CoreWeave presents an intriguing investment opportunity. Its solid value proposition, bolstered by a close relationship with NVIDIA, has led to rapid demand growth. Nonetheless, the company’s financial health remains concerning.
Investors may benefit from reevaluating core aspects after the company’s first earnings release on May 14, which will provide new insights and allow Wall Street analysts to probe management on critical operational issues.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
