CoreWeave's AI Demand Surges But Expansion Spending Cuts Into Profitability

CoreWeave (NASDAQ:CRWV) shares tumbled on Wednesday after the AI-focused cloud computing provider posted mixed second-quarter results, highlighting surging revenue and backlog alongside margin pressures from an aggressive expansion plan.

The company reported $1.21 billion in quarterly revenue, well above prior-year levels and fueled by new contracts with OpenAI and major hyperscalers, but investors reacted to guidance that signals significant near-term costs as CoreWeave ramps capacity toward 900MW by year-end.

Stifel analyst Ruben Roy maintained a Hold rating on the stock, raising his price forecast to $120 from $115. HC Wainwright’s Kevin Dede kept a Neutral rating, while Needham analyst Mike Cikos also maintained a Hold.

Also Read: CoreWeave’s $6 Billion AI Bet Boosts Core Scientific Shares Ahead Of $9 Billion Merger Deal

Stifel Highlights Backlog and Revenue Strength

Roy said CoreWeave delivered strong second-quarter results, surpassing revenue and adjusted operating income estimates on continued compute demand despite power constraints. He noted that the backlog rose to about $30.1 billion, bolstered by a $4 billion OpenAI expansion and new hyperscaler contract wins likely tied to Microsoft (NASDAQ:MSFT), Meta Platforms (NASDAQ:META), and/or Alphabet (NASDAQ:GOOGL) Google. Another expansion is set to benefit the third quarter.

Roy called guidance “mixed,” with third-quarter and full-year 2025 revenue outlooks above consensus but margins below expectations due to management conservatism. He projected third-quarter revenue of $1.28 billion and full-year 2025 revenue of $5.25 billion, alongside adjusted operating income of $175 million for the third quarter and $815 million for the year. His model factors elevated interest expense from recent debt raises, reaffirmed a $21.5 billion fiscal 2025 CapEx target to reach 900MW capacity, and potential ~10% dilution from the pending Core Scientific (NASDAQ:CORZ) acquisition.

HC Wainwright Notes Blockbuster Q2 Performance

Dede said CoreWeave delivered a “blockbuster” second quarter, with revenue climbing 23.5% sequentially to $1.213 billion, well above his $1.063 billion forecast, driven by AI adoption across consumer and enterprise markets. He pointed to a 16% sequential jump in backlog to $30.1 billion, fueled by a $4 billion OpenAI extension and a new hyperscaler deal. He noted that CoreWeave expects to expand capacity from 470MW to 900MW by year-end, with 2.2GW contracted.

Dede raised his fiscal 2025 sales estimate to $5.154 billion from $4.942 billion, reflecting $150 million in second-quarter outperformance and management’s 4%–7% sequential growth guidance for the third quarter. He kept his fiscal 2026 forecast at $11.2 billion. He noted AI integration becoming mandatory for competitive enterprises and highlighted CoreWeave’s new wins with Morgan Stanley (NYSE:MS) and Goldman Sachs (NYSE:GS).

Needham Emphasizes Backlog and Capacity Buildout

Cikos said CoreWeave delivered a second straight quarter of substantial upside, beating his second-quarter revenue estimate of $1.09 billion with $1.21 billion and exceeding his adjusted operating income forecast of $163.6 million with $199.8 million. Management guided third-quarter revenue 2% above Street expectations at the midpoint. In contrast, full-year revenue guidance of $5.15 billion to $5.35 billion raised the midpoint by $250 million, well above the second-quarter beat of about $130 million.

Cikos noted management’s plan to exit 2025 with more than 900MW of active power, up roughly 90% from the second quarter’s 470MW, with capital expenditures of $20 billion to $23 billion serving as a strong leading indicator for future revenue but a near-term margin headwind.

He highlighted the growing backlog, up 86% year-over-year to $30.1 billion, supported by the $11.9 billion OpenAI deal, a $4 billion OpenAI expansion, and another hyperscaler contract to be reflected in third-quarter results. Cikos projected fiscal 2025 revenue of $5.1 billion and adjusted operating income of $821 million, and he flagged execution and supplier risks tied to the significant capacity buildout.

Price Actions: CRWV stock is trading lower by 18.92% to $120.61 at last check Wednesday.

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