TLDR
- CoreWeave cut 2025 revenue guidance to $5.05B-$5.15B from $5.35B due to construction delays at a major data center partner
- Stock dropped 26% post-earnings and now trades 60% below its 52-week high at around $78
- Q3 revenue hit $1.365B, beating estimates by $65M with 134% year-over-year growth
- J.P. Morgan downgraded the stock from Overweight to Neutral, cutting price target to $110 from $135
- Adjusted operating margin declined to 16% from 21% a year ago while interest expenses tripled to $311M
CoreWeave released third quarter earnings that beat Wall Street expectations on both revenue and profit. But the good numbers weren’t enough to save the stock.
CoreWeave, Inc. Class A Common Stock, CRWV
The AI cloud provider reported revenue of $1.365 billion, topping estimates of $1.3 billion. That marked a 134% jump from the same period last year.
The net loss came in at $110 million, or $0.22 per share. Analysts had expected a loss of $0.51 per share.
Adjusted EBITDA reached $838 million, beating the $808 million forecast. The revenue backlog doubled from the previous quarter to $55.6 billion.
The company announced major wins during the quarter. It became the first to deploy Nvidia’s GB300 NVL72 systems.
CoreWeave also secured a $14 billion multi-year deal with Meta Platforms. The company expanded its OpenAI partnership to $22 billion in commitments.
Despite the strong quarter, management cut its full-year 2025 outlook. The new revenue guidance ranges from $5.05 billion to $5.15 billion, down from up to $5.35 billion.
The revision stems from construction delays at an unnamed major data center partner. The contract was extended to preserve the total deal value, but the postponement will shift revenue recognition.
Market Reaction Turns Harsh
CoreWeave stock has lost 26% of its value since the earnings report. Shares were already falling before that, closing lower in 10 of the last 11 days.
The stock dropped another 7% in premarket trading after the report. Shares now trade about 60% below their 52-week high of $187.
J.P. Morgan analyst Mark R. Murphy downgraded the stock from Overweight to Neutral. He cut the price target to $110 from $135.
Murphy said the downgrade reflects supply-chain problems slowing CoreWeave’s data center projects. The delays forced the company to trim planned capital spending by $8.5 billion.
“Forecasting when these moving parts will stabilize remains difficult,” Murphy wrote in his note.
Profitability Concerns Mount
Even after the sharp correction, CoreWeave trades at about 9 times forward sales based on revised guidance. That’s a premium for a company still posting losses.
Adjusted operating margin fell to 16% in the third quarter from 21% a year ago. The decline reflects rising infrastructure costs and competition for resources like GPUs and skilled talent.
Interest expenses tripled to $311 million in the third quarter, up from $104 million last year. Management noted progress in lowering financing costs, but debt servicing continues to rise.
The company is building out 32 data centers. Active power reached 590 megawatts while contracted power hit 2.9 gigawatts.
CoreWeave emphasized the delays are isolated and temporary. The issues are expected to ease by early 2026.
Murphy maintains a positive long-term view despite the downgrade. The company keeps winning major AI deals with OpenAI, Microsoft, and Nvidia.
The $56 billion backlog points to steady future demand. A broader customer base is helping reduce reliance on a few big clients.
New customers added in the quarter include CrowdStrike, Rakuten, Poolside, and Jasper. Murphy compared the situation to Microsoft’s Azure recovery earlier this year after similar project delays.
Wall Street analysts maintain a consensus Moderate Buy rating on CoreWeave. That’s based on 11 Buy, 11 Hold, and one Sell recommendation from 25 analysts over the last three months. The average price target of $147.96 implies about 100% upside from current levels.
Get 3 Free Stock Ebooks
Discover top-performing stocks in AI, Crypto, and Technology with expert analysis.
- Top 10 AI Stocks - Leading AI companies
- Top 10 Crypto Stocks - Blockchain leaders
- Top 10 Tech Stocks - Tech giants
