CoreWeave beats quarterly revenue estimates as AI demand defies growing doubts

COREWEAVE beat Wall Street estimates for quarterly revenue on Tuesday (Nov 10), 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’s shares were up more than 7 per cent in extended trading following a sharp slump last month.

CoreWeave reported revenue of US$3.66 billion for the third quarter ended September, up from US$1.37 billion a year earlier, compared with analysts’ average estimate of US$3.55 billion, according to data compiled by LSEG.

It also raised its annual revenue forecast to between US$13 billion and US$13.3 billion, from US$12.4 billion to US$13.2 billion earlier.

“Customer contracts come first, and investment follows,” CEO Mike Intrator said in a statement.

“Because CoreWeave’s investments are tied to committed demand, lenders have something concrete to lend against and customers typically help fund the buildout through prepayments.”

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The company’s stock has crashed more than 40 per cent 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 centres that generate little return until they are leased.

The US$27 billion Nvidia-backed AI cloud company has never turned a profit, according to data compiled by LSEG, and had more than US$50 billion in debt as of June.

Yields on CoreWeave’s 2030 bonds are currently at about 15.2 per cent, while its five-year credit-default swaps — a measure of perceived default risk — trade at 1,135 points.

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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-centre 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-centre 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 centres 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.

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. REUTERS