CoreWeave beats quarterly revenue estimates as AI demand defies growing doubts

CoreWeave beat Wall Street estimates for quarterly revenue on Tuesday, driven ​by strong demand for its cloud services, easing recent ​concerns around the durability of AI infrastructure ‌demand amid ​its mounting debt load. The company reported revenue of $3.66 billion for the third quarter ended September, up from $1.37 billion a year earlier, compared with analysts' average estimate of $3.55 billion, according ‌to data compiled by LSEG.

CoreWeave's stock has crashed more than 40% in the past month as the company emerged as the focal point of growing fears about a potential AI bubble, with investors fretting about heavy borrowing to fund purchases of ‌chips, land and energy for AI data centers that generate little return until they are leased. The $27 billion Nvidia-backed AI ‌cloud company has never turned a profit, according to data compiled by LSEG, and had more than $50 billion in debt as of June.

Yields on CoreWeave's 2030 bonds are currently at about 15.2%, while its five-year credit-default swaps — a measure of perceived default risk — trade at 1,135 points. The selloff ⁠triggered a ​broader crisis of confidence ⁠in AI stocks, a sentiment amplified after the Democrats' sweeping win in the US midterms, as investors assess the potential for tighter regulation in America's data-center ⁠build-out.

Recent earnings reports from hyperscalers also hinted at delays in data-center projects and a slower ramp in spending. Among CoreWeave's stacked roster ​of customers are Microsoft , Meta, OpenAI and Anthropic. Microsoft has tightened oversight of some data-center projects from the so-called ⁠neocloud companies Nebius, IREN and Nscale as the tech giant focuses on expanding its own data centers, Bloomberg News reported last week.

CoreWeave operates about ⁠52 ​data centers globally supported by advanced Nvidia chips and has a global active capacity of over 1.7 gigawatts — or enough power to supply more than 1.2 million US homes. Some analysts have said financing concerns about CoreWeave are overblown, citing its ⁠execution and financing track record.

Brokerage Truist said that market sentiment had become disconnected from improving economics at AI cloud ⁠providers, saying higher pricing and ⁠increasing prepayments from customers will reduce their dependence on external capital. CoreWeave CEO Mike Intrator in a memo last month sought to address the concerns. He said the firm's deal backlog ‌is large enough to ‌more than cover its debt obligations.