CoreWeave (CRWV) took yet another heavy beating Wednesday, declining 15.5% to $65.78 amid concerns that the economics of the neo-cloud boom will be sufficient to warrant the large amounts of capital being raised. The stock has tumbled about 26% over the last five trading days and is sitting about 56% below its 52-week high of $150.40.
The catalyst is a somewhat disturbing forecast from Gartner. The research firm estimates that 80% or more of neo-cloud companies will go out of business by 2030 due to high capital costs, hardware depreciation and fierce competition. Gartner expects that AI data center operators will require revenues of $8.5 trillion over 2030 to pay back its planned investments, financing expenses and to achieve 12% ROI on its capital investments. However, Gartner predicts that only $3.6 trillion of AI revenues will be generated from its data centers by then.
This forecast is bad timing for CoreWeave, which is facing rising borrowing costs while Wednesday’s unexpectedly higher inflation figures increased pressures on other capital-intensive AI stocks. The Nasdaq Composite index declined 1.9% during Wednesday’s session while CoreWeave posted a much larger decline.
About CoreWeave Stock
CoreWeave is based in Livingston, New Jersey, and operates a dedicated cloud platform designed for artificial intelligence workloads. Its infrastructure offers GPU compute capacity for AI labs, hyperscalers, and enterprises, thereby putting the company in the middle of the rapidly growing AI computing infrastructure buildout. The current market capitalization of CoreWeave stands at about $30.2 billion.
CRWV closed at $65.78 on Oct. 14, down 15.46% during the day. The stock is now only about 8.6% above its 52-week low of $60.55 and is down almost 8% in 2026, turning around a company that used to be one of the market's highest-profile AI infrastructure stocks. For reference, the Nasdaq Composite (NDAQ) index is still up about 14.8% so far this year.
The stock decline has definitely affected CoreWeave's valuation, but saying the stock is cheap is tricky. CRWV is trading at about 6.96 times trailing sales and 21.44 times cash flow. Using price-earnings valuation makes little sense since CoreWeave is not profitable right now. More importantly, the company's debt-to-equity ratio of 6.98 and negative profit margin of -22.7% explain why investors are shifting focus from revenue growth to capital funding costs.
This is important since Gartner's position is not about the decline in demand for AI. In fact, Gartner is concerned that the spending on AI-optimized infrastructure might not be enough to generate sufficient revenues to repay its investment before the hardware becomes obsolete. Spending on AI-optimized Infrastructure-as-a-Service is set to grow from $66 billion in 2027 to $174 billion by 2030; however, Gartner believes that growth might not be sufficient to cover the investments of many companies.
CoreWeave Reports Strong Q2 Earnings
The latest earnings of CoreWeave provide reasons why its debate is quite complicated. The company has reported record second-quarter revenue of $2.58 billion, a 112% increase from $1.21 billion a year ago and just a bit above Wall Street's expectations. The GAAP loss stood at $1.14 per share against a loss of $0.60 in Q2 2025. The adjusted EBITDA increased almost two-fold to $1.51 billion, but its adjusted EBITDA margin fell to 59% from 62%.
Guidance was quite aggressive too. CoreWeave expects Q3 revenue to be between $3.45 billion and $3.60 billion, with full-year 2026 revenue of $12.4 billion-$13.2 billion. This, however, is going to require large investment. The company has raised its 2026 capital expenditures forecast to $35 billion-$39 billion, while Q3 alone is expected to generate $11.5 billion-$13.5 billion of capex.
There is quite a lot of demand for all those investments too. CoreWeave ended the second quarter with approximately $104 billion in revenue backlog and reported that another $25 billion in net new customer commitments have been made in the early stages of Q3. Active power capacity grew by about 500 MW in the quarter to reach 1.5 GW, while the contracted power reached approximately 3.7 GW. Additionally, CoreWeave became the first to validate Nvidia's Vera Rubin NVL72 platform.
However, all those numbers explain the vulnerability Gartner is pointing out. CoreWeave reported $640 million in net interest expenses in Q2, up from $267 million a year ago. Moreover, currently yields on some of its unsecured bonds are approaching 15%, which shows that debt investors are now requiring substantial additional compensation.
What Do Analysts Expect for CoreWeave Stock?
Despite the stock selloff, Wall Street remains quite more optimistic about CRWV stock than its recent performance suggests, with a "Moderate Buy" rating consensus from 35 analysts. The sentiment actually got slightly better too, as the average rating has increased from 4.09 three months ago to 4.23 currently. The gap widens even more when we consider price targets. CRWV's mean analyst target is $137, while the Street-high target is $250 and the lowest is $41. Given Wednesday's $65.78 closing price, the mean target of $137 represents potential upside of about 108%.
On the date of publication, Yiannis Zourmpanos did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.