CoreWeave earnings: Reassured shareholders, double-digit gains

The “neo-cloud” company published its results for the latest quarter. The stock has suffered severe losses on the chart over recent months; since June alone, it is down about 50%. The sell-off was driven by growing doubts about investments in AI and, above all, who will ultimately be the real beneficiary. While the business model and the way the company finances its capital expenditures still leave a lot to be desired, operationally the company pushed many investors’ concerns into the background. The shares are up about 18% at the open after the release.

Earnings

Weak sentiment may have helped the reception to some extent, but it should be stated clearly that the release is good and shows not only nominal growth, but above all an improvement in quality.

• Revenue exceeded USD 2.57 billion versus expectations of USD 2.56 billion. The beat was minimal, although it still represents growth of more than 100%.
• Backlog increased to USD 104.2 billion, nearly 5% quarter over quarter.

The real surprise was operating profitability. Favorable pricing on new contracts points to rapid monetization of deployed capacity, which is crucial for a company with this business model.

• Operating profit came in at USD 128 million, almost twice the expected USD 66 million.
• In addition, the operating margin rose to 5%. That is nearly a fivefold increase versus the previous quarter.

Despite a significant beat, CoreWeave is still the same company.

• Net loss was USD 567 million, though that is less than the roughly USD 677 million expected.

The loss is a consequence of the company’s investments.

• CAPEX totaled USD 9.35 billion, above the upper end of market expectations at around USD 9 billion.

If not for this, the market reaction to the results would likely have been better.

Guidance

Management’s guidance supports the thesis that the company’s fundamentals are improving.

• Annual revenue is expected to exceed USD 12.4 billion.
• ARR is expected to rise to more than USD 18.5 billion by year end.
• Profit could potentially reach as much as USD 1.15 billion.
• CAPEX is projected at USD 35 to 39 billion, versus the prior USD 31 to 35 billion.

Conclusion

CoreWeave delivered an excellent report that beat market expectations where it needed to, and at a time when investors most needed a reason to keep believing in the company. The operational improvement is visible and real; it is also hard to expect results to deteriorate meaningfully in the near term. Most important for the bull case is that the company retains enormous operating leverage, which is only beginning to show up in the numbers. Revenue is posting double-digit growth, but EBITDA and margins are rising even faster. Even the net loss has narrowed clearly, and the company is close to turning net profitable. If the current growth pace is maintained, shareholder profits could be enormous within just a few quarters.

However, that is not the end of the story.

The difference between EBIT and EBITDA is as much as USD 1.3 billion. This stems from the massive amortization and depreciation the company records. This is one of the key weaknesses of data center based businesses, though unlike CoreWeave, for most of them it is ordinary infrastructure rather than the primary vehicle for making money. Coverage of liabilities is only 0.41; while the company can afford this for now, a material deterioration in conditions or sentiment in the corporate debt market could make it insolvent. CoreWeave remains one of the most one-sided and risky bets on the AI revolution, but the current earnings call shifted the center of gravity toward gains.

CoreWeave technical analysis (D1)

The long-term trend on the chart remains moderately negative, which is clearly visible when drawing a broad descending channel from the peak in mid-2025. In the short term, the situation is also problematic due to frequent dips below the 200-day EMA. However, the latest earnings call should help the stock break above the 200-day EMA and move close to the upper boundary of the downtrend, creating a chance to break the negative technical streak. A strong resistance zone around USD 69 clearly provides a hard floor that supply has not been able to break below, and there are few signs that this is about to change. Source: xStation5

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