CoreWeave Cuts Revenue Forecast After Data Center Delay, Shares Drop Despite AI Boom
Nvidia-backed CoreWeave trimmed its annual revenue forecast after a delay at a third-party data center partner, slightly dampening the excitement from a strong September quarter fueled by growing demand for AI cloud services.
The company’s shares fell more than 6% in extended trading after CFO Nitin Agrawal projected 2025 revenue between $5.05 billion and $5.15 billion. This is lower than the prior estimate of $5.15 billion to $5.35 billion, and below analysts’ expectations of $5.29 billion.
Despite the delay, CoreWeave confirmed that the affected customer extended the contract’s expiration date, keeping the total deal value intact, though the company did not disclose the client’s identity.
Strong Q3 Performance Amid AI Demand
CoreWeave has become a critical infrastructure partner for leading tech companies, landing several multibillion-dollar deals, including:
- A $14 billion deal with Meta Platforms
- A $6.5 billion contract with OpenAI, the creator of ChatGPT
These contracts highlight the skyrocketing demand for AI-powered GPUs.
In the third quarter, CoreWeave’s revenue more than doubled to $1.36 billion, exceeding analysts’ expectations of $1.29 billion.
Expansion and Capital Spending
Reflecting broader trends in the cloud and AI sectors, CoreWeave expects capital spending to more than double next year compared to 2025, with projected spending of $12 billion to $14 billion.
Originally a large-scale Ethereum miner, CoreWeave transformed its powerful GPU infrastructure into a cloud platform supporting AI applications, positioning itself as a key player in the AI revolution.
However, its expansion plans faced a setback in late October when crypto miner Core Scientific terminated a $9 billion all-stock merger agreement, temporarily slowing growth plans.
Margins and Challenges
While CoreWeave’s stock has more than doubled since going public at $40 per share earlier this year, giving the company a valuation above $50 billion, its margins are under pressure:
- Adjusted operating income margin fell to 16% in Q3, down from 21% a year ago
- Rising AI chip prices, intense competition for computing power, and the high cost of expanding cloud infrastructure could further squeeze profits
What This Means for Investors
CoreWeave’s story is a mix of impressive growth and cautionary signals. The company is benefiting from the booming AI market, landing massive contracts and expanding its cloud capabilities. Yet, delays, high costs, and competition could challenge profitability in the near term.
Investors should watch:
- How CoreWeave manages supply chain delays
- The impact of rising chip prices
- Execution on AI cloud expansion
Despite recent setbacks, CoreWeave remains a key player in the AI infrastructure market, and its trajectory will likely mirror the broader growth of AI adoption in cloud computing.
