AI stock CoreWeave (NASDAQ:CRWV) went public earlier this year and it has been a red-hot buy ever since. Should you invest in the stock, could it be the next Nvidia? Let’s dive in and take a closer look at the business and its fundamentals.
First, let’s start with a couple of obvious questions you might have right now, especially if you’re unfamiliar with it:
What does CoreWeave do, and why is it so popular?
CoreWeave rents out GPU computing capacity. Customers can train and run AI models using Nvidia’s chips, without having to make costly investments into hardware themselves. This can be a more cost-effective solution for smaller AI companies, as well as for hyperscalers, which are large tech businesses investing heavily into AI, which need extra capacity. Some of its major customers include OpenAI, Google, and Microsoft. CoreWeave’s business focuses on AI workloads specifically and training related to AI models, as opposed to just generic enterprise workloads. The company says that, “the future runs on CoreWeave.”
And the company also has a key relationship with Nvidia, who is both an investor and a supplier of the chips that it uses in its data centers. This close relationship allows CoreWeave to benefit from the growing trends in AI but at the same time, it’s also dependent on Nvidia.
Due to the boom in AI, CoreWeave’s business has been exploding, with tremendous sales growth, making it one of the hottest buys of 2025. The stock went public in late March and since then it has risen by close to 300%.
Today, its market cap is around $70 billion.
What do CoreWeave’s financials say?
Last month, CoreWeave reported its first-quarter results for 2025.
What’s particularly remarkable is its revenue growth. In Q1, the company’s sales totaled nearly $982 million – that’s a year-over-year growth rate of 420%. That’s an astounding rate of growth far higher than what Nvidia is even achieving these days. It’s little wonder many investors have been jumping on CoreWeave’s bandwagon.
And there’s a lot coming down the pipe as the company’s revenue backlog as of the end of March was $25.9 billion. This includes an $11.2 billion deal it recently won with ChatGPT-maker, OpenAI – which will now also become an investor in CoreWeave.
It can, however, take a while before revenue from these types of deals flow into the company’s financials, as is evident in this graphic. It can multiple years for that to play out. But it is, however, a great sign of the strong demand for CoreWeave’s services, and the potential it possesses, especially as AI companies continue to invest heavily into training advanced models.
However, there are many things investors should consider before deciding to invest in this high-flying stock.
What are the risks with CoreWeave’s stock?
CoreWeave isn’t profitable, and right now, it’s questionable if there is a path to profitability. While its revenue has been growing at a rapid pace, so too have its expenses. Remember that 420% revenue growth in Q1? Well, operating expenses grew by 487%. A staggering number to consider: $264 million – that’s how much the company’s interest expenses were, which was more than one-quarter of its top line.
The company has $3.8 billion in debt that’s current (which means it’s due within the next 12 months) on its book and another $4.9 billion that isn’t current. And as it scales its business and continues to invest in AI infrastructure, those figures may get bigger. This is a capital-intensive business, and that’s a big reason why other AI companies prefer to use CoreWeave than to build out their own AI infrastructure. The company spent a massive $1.9 billion on capital expenditures just during the past quarter – and that’s actually gone down versus previous periods.
Its overall net loss during the quarter was nearly $315 million, more than double its loss of $129 million a year ago. If the company can’t turn a profit now, while demand is through roof, how might it did if things slow down? It’s growing fast and that can make it difficult to control costs when the focus is on expansion, but there’s no evidence of any progress really being made on the bottom line.
72% of its revenue has also come from just a single customer – that’s Microsoft. The lack of diversification is scary because if Microsoft decides to cut back on AI spending, that instantly shatters CoreWeave’s growth prospects. It was just a few years ago, back in 2022 when the economy wasn’t looking so great and tech companies were cutting costs and laying off staff. If there’s a recession this year or next, there could be a repeat of that.
Is CoreWeave worth investing in today?
CoreWeave has been a hot buy and at $70 billion in market cap, it’s not hard to envision a scenario where its valuation may grow even higher given the excitement around AI. But for that to happen, it needs to show that it can scale in a way where its bottom line moves in the right direction. For me, there’s just too much dependence on not only Nvidia but also Microsoft, for this to be a good stock to buy at this stage. If you’re bullish on AI, why not just invest in Nvidia and call it a day? It’s a cheaper stock, and its fundamentals are better.
CoreWeave is hot right now, but buyer beware.