CoreWeave (CRWV) has reported its first earnings as a public company, showcasing results that surpassed Wall Street expectations. Despite a strong revenue performance, the stock experienced fluctuations on Thursday due to anticipated capital expenditures that exceed earlier forecasts for future growth.
The cloud computing service, which specializes in handling artificial intelligence workloads using Nvidia (NVDA) technology, saw its stock rise by 5.4% in early trading before closing with mixed results.
Analyst Nick Del Deo from MoffettNathanson highlighted CoreWeave’s impressive Q1 revenue, which surged by 420% to $981 million. This figure outpaced the anticipated revenues of $857 million, and the company also signed a substantial $4 billion contract expansion with what is believed to be Alphabet (GOOGL) following the quarter’s end. However, he noted that the heightened capital spending outlook for 2025, now projected between $20 billion to $23 billion, could raise investor concerns about the company’s financial stability.
Brad Zelnick from Deutsche Bank added that although the new contracts boost revenue, the significant investment required to maintain this growth could lead to an increase in costs that may dampen short-term profitability. This sentiment was echoed by Morgan Stanley’s Keith Weiss, who hinted at a potential decline in future cash flow and an increase in net debt due to the substantial capital requirements.
For the reported quarter, CoreWeave recorded a loss of $1.49 per share, influenced heavily by stock-based compensation from its recent IPO, compared to a loss of 62 cents per share in the previous year.
Despite challenges such as customer concentration and a high debt burden of $8.5 billion, CoreWeave’s robust business model, heavily supported by clients like Microsoft (MSFT) and Meta Platforms (META), presents a bright future in the rapidly expanding AI market. CoreWeave also reported that its remaining performance obligations, which refers to contracts that are not yet generating revenue, decreased slightly from the previous year.
The company raised $1.5 billion through its initial public offering in March and has completed a recent acquisition of Weights & Biases for $1.7 billion, enhancing its capacity in the AI ecosystem.
CoreWeave is positioned well within the market, holding a high Relative Strength rating of 98 out of 99, indicating strong performance compared to peers. As the demand for AI continues to escalate, CoreWeave remains a key player to watch.
This strong positioning, coupled with significant contracts and ongoing investments, paints a hopeful picture for the future of CoreWeave in a landscape increasingly driven by artificial intelligence.