CoreWeave saw muted price action following the latest earnings report; yet the soft price action is rare for the AI darling. The company went public in March and has stood out as the premier IPO among AI stocks given the stock is up over 200%. The lockup expired last month, which begs the question – can CoreWeave continue to defy the odds and overcome the typical insider selling that is seen around a lockup expiration? Investors typically fare better waiting for anxious insiders to sell, yet CoreWeave has been anything but ordinary.
In terms of timing, CoreWeave has hinted the second half of the year will be stronger. We look at why CoreWeave could end the year on a high note, yet to be prudent, we also look at why there was a negative reaction to the most recent earnings report. We end with a buy plan strategy the I/O Fund is eyeing for weighing the puts and takes on what promises to be a highly volatile, fast moving stock.
CoreWeave Rivals the Big 3 as the First “AI Hyperscaler”
CoreWeave brands itself as the world’s first “AI hyperscaler” as they offer both infrastructure and a software platform for developing large language models and deploying them. Being dubbed an AI infrastructure player means CoreWeave must offer a compelling value proposition to attract business from arguably the largest competitors in the world – AWS, Microsoft Azure and Google Cloud.
In the S-1 filing, the company points out it was built for AI workloads as opposed to the legacy cloud infrastructure-as-a-service providers that were primarily optimized for the cloud software era and e-commerce era. CoreWeave also asserts that outdated cloud infrastructure leads to lower utilization rates when you factor in usage.
One of their primary value propositions is offering bare metal servers, as the company does not need to offer shared GPUs like the hyperscalers. By stripping away the virtualization layer, raw performance goes up for R&D labs, who do not need workload flexibility. Although CoreWeave offers shared infrastructure in terms of storage and networking, one of the company’s key differentiations from the Big 3 is by offering dedicated bare-metal access.
The company also offers proprietary software to help achieve higher total system performance and more favorable uptime relative to competitors. According to the S-1 filing, “by delivering more compute cycles to AI workloads and thereby reducing the time required to train models, our capabilities can significantly accelerate the time to solution for customers […].”
CoreWeave Competes with Big 3 on Higher Usage Utilization Rates (MFUs)
To further understand CoreWeave’s competitive advantage, it’s important to discuss the model FLOPs utilization gap. The “MFU gap” is a metric that describes the gap between compute capacity and usage, which today often ranges between 30% and 40%. Cloud providers are often at 100% GPU utilization, yet there is a much lower utilization rate for GPUs when factoring in maximum floating-point operations per second (FLOPs). Initially, when MFU was coined by Google’s PaLM Paper, model training was running at 20% MFUs.
According to Google’s PaLM paper, they came up with the metric to better gauge a more realistic utilization rate: “Given these problems, we recognize that HFU (hardware FLOPs utilization) is not a consistent and meaningful metric for LLM training efficiency. We propose a new metric for efficiency that is implementation-independent and permits a cleaner comparison of system efficiency, called model FLOPs utilization (MFU).”
When factoring in FLOPs, the best possible (realistic) MFU is in the range of 50% to 60%, as this translates to raw compute being the bottleneck. Lower MFUs indicate inefficiencies, which CoreWeave specializes in solving. This could involve optimizing memory bandwidth, improving communication between GPUs, clearing data input bottlenecks, and other ways in which to fix batch size, enable faster data loading, and/or better ways to balance the compute.
Popular large language models do not publicly report their MFUs, but internally, this utilization rate is a dominant factor in competitiveness and time to market. R&D labs with a higher MFU rate have an important advantage as even an incremental increase in single digits to low double digits can result in a 25% to 50% increase in training speed and cost.
Due to going public, CoreWeave has published its MFU rate of 35% to 45%, stating it is 20% higher than competitors, which means other AI data centers have MFU rates more in the 30% range. Due to FLOPs performing an astronomical number of calculations, small percentages translate to an important advantage.
To put it simply, efficiency equals money and time in large-scale AI projects — training huge models can cost millions of dollars and weeks of time, so even a few percentage points of MFU improvement can translate to a significant advantage.
We covered this in more detail on our premium site in the analysis “CoreWeave: AI Infrastructure Built for the Next Decade.”
CoreWeave is Adding Capacity Hand over Fist Supported by OpenAI, Meta Agreements Totaling $36.6B
Before looking too granular at the financials, it’s important to note that CoreWeave is adding new capacity at a rapid clip. At a high level, the company is the most competitive outside of the Big 3 for new AI workloads, evidenced by the strong partnerships it’s securing with Meta and R&D labs like Open AI.
Last week, CoreWeave announced an expansion of its agreement with OpenAI, worth an additional $6.5 billion. The extension now takes CoreWeave’s total deal value with OpenAI up to $22.4 billion, building on to its initial $11.4 billion deal in March and the first $4 billion expansion in May. The $6.5 billion deal extends through May 2031, representing average annual revenue of more than $1.2 billion.
On Tuesday, CoreWeave signed a $14.2 billion deal with Meta, also lasting through 2031, marking one of its largest single deals to date. The deal represents average annual revenue of more than $2.3 billion.
This provides CoreWeave with other major revenue anchors and additional diversification away from its largest customer Microsoft (72% of revenue in 1H), as the deals could represent nearly 30% of CoreWeave’s current 2026 revenue estimate of $12.1 billion.
When discussing its customer concentration, CoreWeave made it crystal clear that there is no better customer to have at the moment: “And that when you have a company like OpenAI or an entity like OpenAI consuming compute, they're just doing it at an order of magnitude that these other companies have not achieved yet.”
Looking beyond Open AI, CoreWeave has a contracted backlog of $30.1 billion, up $4 billion from Q1 and has doubled year-to-date, with expectations for 50% (or ~$15 billion) to convert to revenue over the next 24 months. The most recent deals with OpenAI and Meta bring this to over $50 billion in contracted backlog.
There are many pieces that must come together to deliver this backlog in the coming years including raising capital to build the infrastructure. However, keep in mind the company has a market cap of about $60 billion or roughly 1.3X the contracted backlog. Although I’m not suggesting a valuation be based off backlog, it’s certainly convincing the stock has room to run given the sheer size of the contracts it’s securing from the largest players in AI.
In early September, CoreWeave announced that key partner and investor Nvidia had entered a new order worth up to $6.3 billion under the duo’s pre-existing 2023 master services agreement.
With the new order, whenever CoreWeave’s compute capacity is not fully utilized, Nvidia will be obligated to purchase the unsold capacity. The deal extends through April 2032 and carries a total value up to $6.3 billion. While demand is currently strong and capacity is likely sold out for the near future, having Nvidia backstop future capacity helps alleviate concerns related to high customer concentration and de-risks its future growth story by providing some degree of guaranteed revenue. CoreWeave will disclose the entire MSA in its upcoming quarterly report.
Expanding Footprint with $6B Pennsylvania Data Center, UK Investment
In mid-July, CoreWeave announced a $6 billion data center project in Pennsylvania, with an initial capacity of 100MW with potential to expand to 300MW, though the company has not been upfront about delivery timelines for the initial phase or subsequent phases. This project is expected to be the cornerstone of CoreWeave’s vision of creating a mid-Atlantic hub from New York to Virginia.
Under its first phase, it likely will become one of CoreWeave’s largest data center facilities, considering its current active power footprint averages just over 14MW per data center. At full capacity, the facility will represent nearly 14% of CoreWeave’s current contracted power. On the capex side, CoreWeave has secured $4 billion in funding for the project, including a $200 million investment into grid infrastructure to support the facility. This will limit the amount the company will have to fund out of pocket, lessening its capex needs, which will already be quite elevated come Q4.
CoreWeave is also expanding its presence in the UK with a new ~$2.0 billion investment, working with Nvidia and data center operator DataVita in Scotland to deploy Blackwell Ultra GPUs. CoreWeave’s international presence is rather limited, with just five data centers across Europe and two in the UK, and investing to expand its international presence will help the company tap into growing demand across Europe.
Capex Weighted Heavily Towards Q4
One of the larger risks for investors coming into year-end is CoreWeave’s planned capex, with the company currently expecting the majority to land in Q4 due to timing of when infrastructure will go live. CoreWeave maintained its full-year capex guide of $20 to $23 billion, though in the first half, reported capex was only $4.8 billion (total PP&E increase of $5.7 billion minus $0.9 billion related to construction progress). To put this in perspective, this is 4-5x of the company’s guided revenue for the year.
Given that CoreWeave guided for just $2.9 to $3.4 billion in capex in Q3, or YTD spend of just $7.7 to $8.2 billion, Q4 capex is implied to be in the range of $12 to $15 billion, or nearly 7-9x estimated quarterly revenue of $1.8 billion.
The first caveat here is that CoreWeave does not have nearly enough cash to fund this capex entirely by itself. CoreWeave likely will have close to $5 billion in cash and equivalents after raising $2 billion in 9.25% senior notes and upsizing another 9.0% note raise to $1.75 billion, with additional access to a third delayed draw term loan facility for $2.6 billion to fund capex and GPU acquisitions for customer contractions. Combined, this still will not fully cover projected capex for Q3 and Q4.
The second caveat is that turning to the debt market will be costly, as CoreWeave has currently been pricing senior notes at or above a 9% rate, meaning raising $10 billion in fresh debt (such as what analysts from DA Davidson expect) at a similar rate could cost nearly $1 billion annually in interest payments.
CoreWeave Only Has 20% of Contracted Power Active
The reason why CoreWeave must spend aggressively on capex is directly tied to capacity, which is needed to convert its backlog to revenue and maintain hypergrowth. As of Q2, CoreWeave had ~470MW of active power across 33 data centers, or nearly 20% of its 2.2GW of contracted power, leaving an additional ~1.73GW to be developed. At its current scale, CoreWeave has energized >250,000 GPUs, suggesting that at 2.2GW, it can easily energize well over one million leading-edge GPUs.
Bringing the rest of its power footprint online will not only be expensive but necessary to support its growth story. Management stated they are aiming to nearly double active power by year-end to 900MW, hence the substantial increase in capex in 2H:
“We are aggressively expanding our footprint on the back of intensifying demand signals from our customers, ensuring that we maintain a durable multiyear runway for growth. We are now on track to deliver over 900 megawatts of active power before the end of the year.”
CoreWeave operates 33 data centers, primarily in the U.S. with five in Europe, supported by ~470MW active power and ~2.2GW contracted power. Source: CoreWeaveCoreWeave
Core Scientific’s acquisition has provided an extra leg for growth in power: “Upon closing, CoreWeave would own approximately 1.3 gigawatts of gross power capacity across Core Scientific's national data center footprint with an incremental 1 gigawatt or more available for future expansion. This scale enhances our flexibility to take on new projects and meet accelerated customer demand.”
Looking ahead, and assuming power and revenue remain correlated linearly, CoreWeave’s current contracted power footprint may be able to sustain a $25 billion revenue run rate, or enough capacity to take it to 2029’s current estimate.
Unleashing CoreWeave’s Monetization Path and Stock Buy Plan
CoreWeave’s suite of software is another area the company extends its value proposition beyond the Big 3 as the company reduces the need for specialized orchestration frameworks, engineering resources component failures and the need to constantly monitor for downtime.
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- How CoreWeave plans to monetize every chatbot response, API call and application
- The I/O Fund’s buy plan and risk management strategy to help participate in this stock while protecting to the downside
- Details from the recent earnings report that help clarify why the stock sold off
- Important commentary from management that hints the end of the year will be strong for CoreWeave
According to Uvation, by focusing only on GPUs and software optimizations (detailed below), CoreWeave offers bare metal servers at a cost that is up to 20% to 50% cheaper than hyperscalers. This helps to explain why the company’s rapid and aggressive growth.
The company is able to scale quickly with new GPUs due to the Mission Control automation layer that provides automated deployments of systems like the GB300 NVL72s. The company stated: “Mission Control continues to be the cornerstone of CoreWeave's ability to scale at breakneck speed, building a fully automated and rigorous process for cluster life cycle management with unmatched visibility for our customers.”
CoreWeave also offers a Virtual Private Cloud for a private network space. By combining an isolated virtual private cloud with Nvidia’s Quantum InfiniBand, customers get ultra-low latency with enhanced security. Customers can connect workloads to other clouds like AWS, Azure and Google Cloud. In the most recent earnings call, CoreWeave stated: “We also saw significant growth in our backbone and networking service as one of our largest AI lab customers leveraged our networking backbone to connect its multi-cloud inference infrastructure.”
The company's Kubernetes Service is an AI-optimized Kubernetes environment for scheduling AI workloads and scaling up/down for the right mix of CPU, GPU, memory and storage (known as elasticity). SUNK, known for Slurm on Kubernetes, combines container orchestration with a job scheduler to manage large batch jobs. AI labs use this service to combine scheduling for high performance computing with a cloud-native environment.
Local access object transport accelerator (LOTA) for AI object storage is another feature that is optimized for AI workloads by focusing on performance and cost efficiency. The company recently added archive tier object storage, which allows data to move between hot and cold storage based on access patterns, which optimizes costs. In the recent earnings call, the company stated they are seeing customers “shifting petabytes fo their core storage to CoreWeave in the form of multiyear contracts.”
CoreWeave recently completed its acquisition of Weights&Biases in May, with reports placing the transaction at $1.7 billion, a 36% increase from the startup’s $1.25 billion valuation in 2025. The core product that W&B offers is observability, which means engineers can quickly diagnose a failure or inefficiency in the software layer and infrastructure layer. For example, if a model is training slowly, the observability platform will help an AI engineer identify and resolve this quickly.
More recently, CoreWeave integrated W&B for a joint launch of its Inference-as-a-service feature, which allows developers to use APIs to tap into AI models from OpenAI, Meta, DeepSeek, etcetera. Inference is key for CoreWeave to fully monetize its investments in capex-heavy infrastructure. For example, these popular LLMs combined with chain of reasoning inference, which means generating step-by-step reasoning, will become compute-intensive especially at scale. This will lead to CoreWeave monetizing every chatbot responses, API calls and applications to easily payback their initial investments plus some (in time).
Here is what was stated on the call: “In addition to that, the infrastructure that we're building has increasingly been used for chain of reasoning, which is driving a substantial amount of consumption on the inference level. And that's very exciting for us. As I always say, inference is the monetization of artificial intelligence. And we are extremely excited to see that use case expanding within our infrastructure.”
CoreWeave also acquired agentic AI training startup OpenPipe in early September for an undisclosed sum. OpenPipe aids enterprises in customizing AI agents via reinforcement learning with its open-source toolkit ART (agent reinforcement trainer), tying into W&B’s observability and evaluation frameworks for agents that can be built directly on CoreWeave’s infrastructure platform.
Financials
Strong Revenue Growth of 207%
CoreWeave reached a new milestone of over $1.0 billion in revenue in Q2 2025, growing 206.7% YoY to $1.21 billion. On a sequential basis, the Q2 revenue grew by 23.6%. The company beat analyst consensus estimates by 12.2%, driven by strong demand for the company’s AI cloud infrastructure services.
Revenue growth is expected to be strong in the coming quarters, driven by the robust demand due to training and inference workloads. Management revenue guidance for Q3 is in the range of $1.26 billion to $1.30 billion, representing YoY growth of 119.2% and 5.5% QoQ at the midpoint. While the underlying business momentum remains robust,
CoreWeave’s revenue growth is decelerating due to tough comparables. For example, the company put up sky-high growth of 420% in Q1 of 2025, thus making it challenging to sustain a higher growth rate a year later.
Revenue growth is expected to show a 20% acceleration QoQ in Q4 with revenue growing 139.5% YoY and a further 16 percent acceleration QoQ in Q1 2026, highlighting the strong deals signed in the recent quarters.
CoreWeave revenue growth is projected at 119% in Q3 2025, re-accelerating to 156% by Q1 2026.
Looking forward, revenue is expected to grow by 174% YoY to $5.26 billion in the year 2025 and 129.6% YoY to $12.08 billion in 2026 and 48.3% growth in 2027. Most importantly, management has increased the full-year revenue guidance for the second quarter in a row due to the strong customer demand. Management increased guidance by $250 million at the midpoint to a new range of $5.15 billion to $5.35 billion for the year 2025.
Robust Backlog
The company’s backlog was $30.1 billion at the end of Q2, up 86% YoY driven by the company’s strategic deal with OpenAI in March 2025 and the signing of subsequent expansion deals with the company. The company is signing new contracts with enterprise customers and AI startups along with expansion with its hyperscaler customers. More recently, the company also expanded its contract with OpenAI by $6.5 billion which brings the total contract value with the company to $22.4 billion. The company had signed an initial contract with OpenAI in March 2025 for $11.9 billion and an expanded contract in May for $4 billion.
The company’s CEO and co-founder, Michael N. Intrator, highlighted in the Q2 earnings call that the company is signing deals with a diverse customer base, of particular interest is sovereign customers: “We have a tremendous number of sovereigns that are beginning and discussing and talking through how to go about doing this, what technology to use, what software stack to use, where it should be placed right up and down the line. And we are very confident that we will continue to expand our footprint within the sovereign cloud universe.”
The key takeaways are that the company has strong future growth and it is also diversifying its customer base, as this helps to allay investor fears regarding the high customer concentration. The company derived 77% of 2024 revenue from its two largest customers, i.e., Microsoft and Nvidia. While in the recent quarter, Microsoft accounted for 71% of the total revenue. Goldman Sachs estimates that Microsoft’s share is expected to drop to 38% in 2026, followed by OpenAI at 21%, Nvidia at 6%, and the remaining 35% to be attributed to other customers.
Margins
The company is investing heavily in data center and server infrastructure to meet very strong AI demand from its customers. The management tried to explain in the Q2 earnings call that expenses are front-loaded and have a short-term impact on the margins. However, the Street sold the report as the top line raise did not flow through to the bottom line, causing a post-earnings sell-off.
Operating leverage will help the company improve margins in the coming years. Furthermore, the company is also expected to have $500 million of annual run rate cost savings by the end of 2027 once the Core Scientific acquisition is completed.
GAAP profitable in 2027
The company reported GAAP loss per share of (-$0.60) in Q2 compared to the analyst consensus estimate of (-$0.49), missing estimates by –21.7% due to the higher operating expenses, particularly the technology and infrastructure expenses.
Analysts expect GAAP loss per share of (-$2.67) for this year, followed by (-$0.90) for 2026. They expect a positive GAAP EPS of $1.59 in 2027.
Analysts expect CoreWeave to turn GAAP profitable by 2027 with estimated earnings of $1.59 per share.
Cash, Debt & Capex
CoreWeave’s business model is based on aggressive capacity expansion, currently fueled primarily by debt. As a result, cash is rather thin and gets spent quickly, and free cash flow is widely negative.
- CoreWeave reported $1.15 billion in cash and equivalents (excluding $0.56 billion in restricted cash and equivalents), though CoreWeave updated in an 8-K related to its now upsized $1.75 billion raise that total cash will be closer to $5 billion.
- Operating cash flow was ($251.3 million) for a (21%) margin in Q2, widening from ($117.8 million) in the year ago quarter. Free cash flow was ($2.7 billion) for a (223%) margin, widening slightly from ($2.36 billion) in the year ago quarter.
- Debt was reported at $11.05 billion in Q2, with $3.62 billion being current. Current debt is likely closer to $12 billion now, with a majority (~$6.7 billion) tied to its two existing delayed draw term loan facilities; if the new DDTL is drawn upon, debt could rise to $14.6 billion. On the other hand, the company is trying to reduce its cost of capital by raising cash through secured debt, using its highly valuable GPUs as collateral, which is positive.
- As discussed above, capex for the second half of the year is expected to be >$15 billion, with cash on hand only covering one-third of that at maximum. This will place the emphasis on finding alternative funding to finance this spending.
Management Hinted 2025 Will End Strong
As stated, CoreWeave currently operates 33 data centers for 470 megawatts of power, yet is going to deliver an additional 400-plus MW of power by the end of the year. This means the year will be back-half loaded, as management made abundantly clear:
“And so we are very comfortable with the ramp that we are seeing in front of us in order to deliver the 900 megawatts-plus of power as we go through Q4. It is going to be backloaded, as Nitin said. We knew that it was going to be backloaded as we came in. And we're watching the build-out and scaling of that infrastructure very systematically as we continue to move through the year.”
It was also helpful to hear in the last earnings all that the company has signed expansion contracts with both hyperscalers, with one of those contracts being reported in Q2 already but the other will be reported in the upcoming Q3 earnings report: “One of those contracts was signed in Q2 and is reflected in the Q2 revenue backlog number. The other one was signed in Q3 and will be reflected in our Q3 revenue backlog number.”
Given the use of the word hyperscaler, this would be in addition to the OpenAI $6.5B announcement.
CoreWeave’s Buy Plan
The near-vertical move from CoreWeave’s IPO low suggests the formation of a bullish long-term structure, taking the shape of a developing five-wave pattern. Since the June peak, price action has produced a three-wave pullback, which supports the potential for a larger breakout and a push to new highs.
Based on the current, limited price history, I am tracking two potential scenarios. Both imply that this correction could ultimately lead to new highs, provided that any additional weakness remains above $61.50.
- Green – In this case, the market is in the early stages of a new uptrend. As long as any pullback holds above $96.75, we should expect a move back to retest the all-time highs. A decisive breakout above those highs would likely confirm a sustained continuation of the uptrend that originated at the IPO low.
The current pattern suggests a leading diagonal is in play. This is evident with the overlapping push higher from the September 12th low. We should see this push fail under $155 and then trend back into the $125 – $115 range but holds $114.65. If we instead see a strong push over $155 on expanding momentum and volume, we will then likely attack the $183 – $188 region. Over $188, and we should see the larger uptrend resume.
- Red – If price breaks below $114.65, and then $96.75—ideally in a sharp, decisive decline—downside targets shift toward the $65 region before a meaningful bounce develops. Under this scenario, any long positions should be managed with protective stops near $61.50.
CoreWeave stock's buy plan by Knox Ridley, Portfolio Manager of the I/O Fund
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Join us this Thursday at 4:30 p.m. Eastern Time as Portfolio Manager, Knox Ridley, goes through in detail the I/O Fund’s plans for buying CoreWeave with a strategy for risk managing the stock while also protecting to the downside. Every week, Ridley discusses the most promising AI stocks, and more.
The I/O Fund issued 22 buy alerts between March and April of this year, targeting the AI economy. We now have a handful of positions up over 80%, one position up over 100% and two entries up over 300% in 2025. Our cumulative returns of 210% over a five-year period would place us as #2 if we were a hedge fund and #5 if we were an ETF. Learn more here
Please note: The I/O Fund conducts research and draws conclusions for the Fund’s positions. We then share that information with our readers. This is not a guarantee of a stock’s performance. Please consult your personal financial advisor before buying any stock in the companies mentioned in this analysis.
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