CoreWeave Reports Strong Q1 2025 Earnings, Revenue Surges 420%

CoreWeave, Inc. (CRWV) announced impressive first-quarter results for 2025, with revenues of $981.6 million. This figure exceeded the Zacks Consensus Estimate by 15.2% and represented a remarkable 420% increase compared to the previous year.

After the earnings announcement on May 14, CRWV’s shares rose over 19%, closing the last trading session at $80.30. Since its trading debut on March 28, the stock has more than doubled from an initial opening price of $39.

Given these substantial gains, investors may wonder whether to remain invested in CRWV or take profits. Analyzing the company’s recent earnings and long-term prospects will shed light on this issue.

CRWV’s Q1 Earnings Overview

CRWV reported a first-quarter loss per share of $1.49, significantly larger than the loss of 62 cents reported in the same quarter last year. The increased loss includes $177 million in stock-based compensation expenses related to performance-based awards that were satisfied at the time of the IPO.

The adjusted net loss for the quarter was $149.6 million, a marked increase from $23.6 million a year earlier. The company reported a revenue backlog of $259 billion, which reflects a 63% year-over-year increase and includes expected revenue from committed contracts.

Management announced a strategic partnership with OpenAI valued at approximately $11.9 billion, in addition to onboarding several new enterprise and hyperscaler clients. Notably, an agreement for a $4 billion expansion with a significant AI client will contribute to the revenue backlog starting in the current quarter.

Total operating expenses surged to $1 billion from $171.8 million in the prior year, influenced by stock-based compensation recognized upon IPO completion. Adjusted operating income rose to $162.6 million, reflecting a 550% increase, with the adjusted operating margin improving to 17%, up from 13% the previous year.

Future Outlook for CRWV

The growing demand for AI cloud infrastructure positions CoreWeave favorably. As an AI-focused hyperscaler, the company’s cloud platform is designed to accelerate and scale GenAI applications. The infrastructure and cloud services are specifically optimized for AI workloads, distinguishing CRWV from traditional providers, whose solutions often stem from legacy architectures.

During the first-quarter earnings call, CRWV emphasized the projected global economic impact of AI, expected to reach $20 trillion by 2030, with a total addressable market of approximately $400 billion projected for 2028. Alongside scaling its capacity and securing financing for infrastructure, the company is also enhancing its go-to-market strategies.

CoreWeave currently operates a growing network of 33 data centers across the U.S. and Europe, backed by 420 megawatts of active power. The acquisition of Weights and Biases has expanded its clientele to include 1,400 AI labs and enterprises.

In collaboration with NVIDIA Corporation (NVDA), CoreWeave has implemented GPU technologies at scale. It was one of the first cloud providers to bring NVIDIA H100, H200, and GH200 clusters into production for AI workloads, with services also optimized for NVIDIA GB200 NVL72 rack-scale systems.

With this positive momentum, CoreWeave anticipates full-year 2025 revenues between $4.9 billion and $5.1 billion, and adjusted operating income in the range of $800 million to $830 million. For the second quarter, projected revenues fall between $1.06 billion and $1.1 billion, with adjusted operating income expected to be between $140 million and $170 million.

Challenges Ahead for CRWV

Elevated capital expenditures could raise concerns among investors. Management expects capex to be between $20 billion and $23 billion for 2025, driven by accelerated investment to satisfy customer demand. Additionally, stock-based compensation is anticipated to remain elevated in 2025 due to IPO-related grants. Should revenue not keep pace with such high capital intensity, it poses a risk, especially in an environment where demand for AI might fluctuate.

In the first quarter, high interest expenses also posed challenges, with $264 million registered—above expectations—due to revised vendor payment terms. The company projects interest expenses to stay elevated, estimated between $260 million and $300 million in the current quarter. Such costs could pressure adjusted net income and impact free cash flow generation.

CoreWeave contends with significant competition in the AI cloud infrastructure arena, represented by giants such as Amazon (AMZN), Microsoft (MSFT), and Alphabet. AWS and Azure dominate more than half of the cloud services market, presenting competitive challenges. Notably, 77% of CoreWeave’s revenues in 2024 came from its two largest customers, indicating a considerable risk if either client were to discontinue their relationship.

CRWV Stock Performance Compared to Peers

CRWV shares have increased by 126.7% in the past month, significantly outperforming the Zacks Internet Software industry’s growth of 29.6% and the S&P 500’s increase of 15.3%. Within the broader Computer and Technology sector, which rose by 22.6% in the same timeframe, CRWV has shown strong relative performance.

In comparison, competitors such as Microsoft and Amazon posted gains of 26.5% and 22.9%, respectively, during the same period.

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