CoreWeave shares plummet: revenue doubles, but rising AI chip costs hit margins

US artificial intelligence cloud infrastructure provider CoreWeave, considered a protégé of Nvidia, widened its first-quarter loss and warned that rising chip prices could drive up its capex this year. The company's stock price collapsed despite a doubling of revenue and record demand for AI power rentals.

CoreWeave shares fell 9.5% to $116.65 apiece in the New York postmarket on May 7.

Presenting a quarterly report, the company raised the lower end of its capital expenditure forecast for 2026 from $30 billion to $31 billion, The Wall Street Journal writes. Its CEO Michael Intrator explained to analysts, "Over the last six to nine months, there has been a severe shortage of certain components whose prices have gone up. You've heard about it across the industry."

CoreWeave's January-March revenue jumped 112% year-over-year to $2.08 billion against a Wall Street consensus forecast of $1.97 billion. The company sold out its capacity for 2026, Intrator said. "This was the strongest quarter for new contracts in CoreWeave's history, with the order book reaching nearly $100 billion," he said.

Despite strong demand, CoreWeave reported a quarterly loss of $1.4 per share. Stock analysts on average expected a one and a half times smaller loss - $0.95 per share. Capex for the quarter reached $6.8 billion with a consensus forecast of $6 billion. The company set revenue guidance for the current quarter in the range of $2.45 billion to $2.6 billion - also worse than Wall Street expectations, Marketwatch reports.

This year, CoreWeave's stock has seen an 80% increase, and since the company went public in March 2025, its stock price has risen 230%. The latest rally began about a month ago, when investors once again believed in the AI trend, and CoreWeave announced three major deals at once: with Meta Platforms, Anthropic and trading firm Jane Street, Bloomberg recalls.

Demand for the services of so-called neoclouds like CoreWeave and Nebius has surged thanks to the AI boom. But triple-digit sales growth comes at a cost: CoreWeave, whose key vendor, investor and customer is Nvidia, spent nearly $7 billion on expanding its data centers in the first quarter and expects another $7 billion to $9 billion in spending in the second quarter, Barron's notes. The cloud provider is financing these expenses primarily on credit.

CoreWeave's financial success depends on converting its order book into revenue, which requires the rapid commissioning of new data centers. However, this process is accompanied by a sharp rise in costs: the adjusted operating margin for the quarter shrank from 17% a year earlier to 1%. The company's management warned that in the short term, aggressive data center construction will put significant pressure on gross margins. The company believes profitability will recover once growth rates normalize, MarketWatch reports.

Zacks Investment Research equity strategist Andrew Rocco compared CoreWeave's strategy to Amazon's emergence as an e-commerce pioneer, noting that the company is sacrificing short-term profitability to gain market traction. "If investors are willing to stay the course, CoreWeave has a chance to become a dominant player in the AI infrastructure industry," Rocco added.

Of the 36 analysts tracking CoreWeave quotes, 23 have given the company's securities a "buy" rating and only two recommend selling them, Bloomberg reports. However, their average 12-month target price of $131 per unit is only 1.7% above the closing level on Ma. 7 - despite the fact that this target has been raised over the past six months.

This article was AI-translated and verified by a human editor