Key Takeaways
- CoreWeave is emerging as a leader in the next generation of data center technology, particularly in AI-specific cloud infrastructure
- The company has partnered with Nvidia and has a growing backlog of over $55 billion
- CoreWeave’s revenue has increased by 204% in the first nine months of 2025, but it is operating at a loss and has accumulated over $14 billion in debt
- The company has issued a $2.2 billion offering in convertible notes to address its debt and has a price-to-sales ratio of 9, suggesting room for stock price increases
- CoreWeave’s AI-focused neocloud is benefiting from its partnership with Nvidia and has a growing demand, making it a potentially worthwhile investment despite the risks
Introduction to CoreWeave
CoreWeave has built a compelling AI cloud product despite the stiff competition in the space. As the article states, "When it comes to cloud computing, Amazon was the pioneer, and it remains the leading company in the industry: Amazon Web Services still has a 29% market share." However, CoreWeave is emerging as a leader in the next generation of data center technology, particularly in AI-specific cloud infrastructure. With a market cap of just $46 billion, CoreWeave is a tiny fraction of the size of the megacaps that it’s competing with, but it has managed to secure a growing backlog of over $55 billion.
The Rise of CoreWeave
As the article notes, "some customers prefer CoreWeave’s AI-specific cloud offerings to the general-purpose infrastructure of the larger hyperscalers." This has led to a significant increase in revenue, with the company booking nearly $3.6 billion in revenue in the first nine months of 2025, a 204% increase compared to the same period in 2024. Additionally, CoreWeave has partnered with Nvidia, a CoreWeave investor that is supplying the cloud company with its latest AI accelerators. This partnership has attracted notable clients, including OpenAI and Microsoft, which has struck a multibillion-dollar deal with CoreWeave to supply processing power for its AI models.
Financial Challenges
Despite its growing revenue, CoreWeave is operating at a loss and has accumulated over $14 billion in debt. The company’s operating expenses rose by 267% in the first nine months of 2025, and it has had to borrow money to cover its costs. As the article states, "CoreWeave laid out over $6.2 billion in capital expenditures in the first nine months of the year." However, the company has recently issued a $2.2 billion offering in convertible notes at a low interest rate of 1.75%, which will help to address its debt.
Neoclouds as the Future of Cloud Computing
CoreWeave’s AI-focused neocloud is benefiting from its partnership with Nvidia, as evidenced by its growing backlog. The article notes that "CoreWeave’s AI-specific cloud offerings" are preferred by some customers over the general-purpose infrastructure of larger hyperscalers. This suggests that CoreWeave’s neocloud is well-positioned for the future of cloud computing. As the article states, "Neoclouds as the future of cloud computing" is a trend that CoreWeave is capitalizing on, and its partnership with Nvidia is a key factor in its success.
Investment Risks and Opportunities
While CoreWeave’s debt and operating losses may be a concern for investors, the company’s price-to-sales ratio of 9 suggests that it has considerable room for stock price increases. As the article notes, "CoreWeave may be worth the risks it faces" given its huge backlog and revenue growth track record. However, investors should be aware that the company’s stock price is subject to high expectations, making it a somewhat risky investment. Nonetheless, CoreWeave’s potential for growth and its position in the emerging market of AI-specific cloud infrastructure make it a potentially worthwhile investment for those willing to take on the risks.
https://www.fool.com/investing/2026/01/29/the-artificial-intelligence-ai-stock-thats-quietly/
