CoreWeave’s stock price plummeted as much as 7% after the company announced that it expects to spend significantly more on capital expenditures than initially projected. According to Bloomberg consensus estimates, CoreWeave plans to spend between $20 billion and $23 billion in 2025, surpassing the estimated $18.3 billion forecast by Wall Street analysts.
Reasons for Increased Spending
The increased spending is driven by growing customer demand, according to CFO Nitin Agrawal. He stated that the spending is "fundamentally driven by increased customer demand," adding that "we expect our capex will continue to increase significantly in future years." This surge in demand is largely attributed to CoreWeave’s role as one of the largest holders of Nvidia’s graphics processing units and its rental of data center capacity to major tech firms like Microsoft and Meta.
Financial Performance
Despite the higher spending plan, CoreWeave reported revenue of $981.6 million for the three months ending March 31, exceeding Wall Street expectations of $862.3 million. The company projects revenue growth for the second quarter and full year, with estimates ranging from:
- $1.06 billion to $1.1 billion for the quarter
- $4 billion to $5 billion for the year
Future Prospects
CEO Michael Intrator hinted at a new deal with an unnamed client that would account for roughly half of its revenue next year, stating, "With regards to the hyperscale client, there aren’t that many hyperscalers, so we can look at our website and assume who the addition is." Analysts remain optimistic about CoreWeave’s prospects due to booming AI demand.
David Davidson analyst Gil Lurias commented, "Demand for the platform is robust and accelerating as AI leaders seek the highly performant AI cloud infrastructure required for the most advanced applications."
Cautions from Analysts
However, some analysts caution against high expectations due to low margins and leveraged returns taken on very high rates. One analyst noted, “If the demand wanes, this doesn’t go well because it is a company with inherently low margins and leveraged returns that is taking on very high rates.”
Stock Performance
Shares have jumped nearly 55% over the past month after falling as low as $35 in August (CoreWeave listed publicly last month), trading at $67 on Wednesday. Macquarie representative Paul Golding noted in a note to investors ahead of its earnings report that its “competitiveness, together with the outlook for the AI space, drives scope for further growth.”
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