CoreWeave shares jump 20% after quarterly revenue beats estimates

What the quarter showed

CoreWeave shares rose as much as 20% in New York on Wednesday, reaching $58.70, after the AI infrastructure provider reported third-quarter results above Wall Street estimates. According to BlockTrends, it was the company's largest intraday gain in three months, following a run of losses that had left the stock down 32% for the year.

Revenue for the quarter was $3.66 billion, against $3.56 billion expected by analysts. The loss per share was $1.27, better than the projected $1.46. CoreWeave raised its full-year revenue outlook to a range of $13 billion to $13.3 billion, above both its previous guidance of up to $13.2 billion and the market consensus of $12.9 billion.

The company's backlog of future orders stood at $132.5 billion at the end of the quarter, a figure the market watches as a measure of demand for computing capacity. CoreWeave supplies processing power for training and running AI models to customers including OpenAI, Meta and Microsoft, according to the report.

The debt question

Behind the revenue numbers, the report says, sits a concern investors have not ignored: CoreWeave carries a heavy debt load. Gil Luria, an analyst at DA Davidson, said the company's interest expenses are significantly higher than its adjusted operating profit. In his words, the data centers it operates do not generate enough cash to cover the cost of the debt taken on to build them.

“It is a business with structural problems, which is why it is under so much pressure,” Luria said, according to BlockTrends.

CEO Michael Intrator has countered that operating profit is growing faster than interest expenses. The company projects positive net income in 2028; until then, the report says, it depends on refinancing and new borrowing.

Cheaper funding and political pressure

CoreWeave has worked to lower its cost of capital. In March it raised $8.5 billion under a credit line that received an investment-grade rating, unusual for a company with a speculative rating, using contracts with Meta as collateral. The financing was split into a floating-rate tranche at 2.25 percentage points above SOFR and a fixed tranche at about 5.9%.

In the coming weeks the company plans another investment-grade loan that could be sold at a yield of 7% to 7.5%, the report says, against a yield of nearly double that on its high-yield bonds. It has also used advance payments from customers as an alternative source of funds.

The report also points to political risk. It says midterm election results brought a more cautious stance on data center expansion, with voters in several localities rejecting new projects. In Texas, governor-elect Gina Hinojosa called for an immediate moratorium on new data centers, according to the report. CoreWeave has been expanding in Asia.

Brian Mulberry of Zacks Investment Management said the market's concern would ease if CoreWeave could repeat this performance for several consecutive quarters, the report says.