CoreWeave Stock Soars: Time to Buy?

Rebecca French

4 months ago

CoreWeave is experiencing a surge in artificial intelligence computing needs.
The company must spend and borrow heavily to keep up with a soaring backlog of orders.
The stock’s valuation leaves little room for execution errors.
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core weaving (NASDAQ: CRWV) Shares rose on Friday Citigroup Analysts give the AI (artificial intelligence) computing stock a buy rating and a 12-month price target of $192, well above where the stock is currently trading (even though the stock rose nearly 23% on Friday).

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While CoreWeave bulls no doubt appreciate the big move, nothing has changed in the underlying business. CoreWeave’s core problem remains: It will likely need to spend a lot of money to prove it can generate substantial and durable profits in line with its valuation.

This tech company operates data centers filled with NVIDIA Demand has exploded for graphics processing units (GPUs) and the sale of computing power to AI labs and hyperscale enterprises that want to train and run large and powerful AI models. The challenge, of course, is converting this demand into revenue and, ultimately, profit.

Warehouse of computer servers. — Image source: Getty Images.

CoreWeave’s latest quarter showed the appeal and limits of its business expansion. CoreWeave CEO Michael Intrator noted in its Q3 2025 update that it had record revenue and nearly doubled its backlog. Revenue for the period was $1.365 billion, up 134% year-over-year, while backlog reached a staggering $55.6 billion as of September 30 (compared to $30.1 billion three months ago).

With a backlog that far exceeds the quarterly limit, the company will undoubtedly be trying to grow as fast as possible. But there are limits to how fast companies can grow — especially in capital-intensive businesses like artificial intelligence infrastructure.

In fact, growth has slowed from its extreme pace. CoreWeave’s revenue growth slowed from 207% in the second quarter. That doesn’t mean something is wrong, but the slowdown is important because investors will likely value the business based on how long it can sustain its impressive growth rates. Additionally, this slowdown highlights some of the risks to CoreWeave’s construction schedule.

CoreWeave’s income statement suggests investors should remain cautious even with the stock’s strong performance late last week. The company’s third-quarter operating income was $51.9 million; however, the company still reported a net loss of $110.1 million. Interest expense is the culprit: CoreWeave’s net interest expense for the quarter was $310.6 million, up from $104.4 million a year ago as the company took on debt to fund its expansion.

CoreWeave’s financing burden isn’t going away anytime soon. Increasing the backlog will require more hardware and power. CoreWeave reported capital expenditures of $1.9 billion in the third quarter alone and expects capital expenditures for all of 2025 to reach $12 billion to $14 billion.

Of course, borrowing is not the only way to raise capital. But when the company can’t obtain debt to fund its expansion, it dilutes shareholders through equity sales. Either way, there are risks to shareholder returns.

The company has secured $14 billion in debt and equity deals so far this year, underscoring CoreWeave’s thirst for capital.

For CoreWeave, execution is what matters. The company needs to bring new sites online on schedule, meet contract demands, and do so without capital costs growing faster than operating revenue.

We’ve seen that there are some risks in execution. In its third-quarter update, management noted that third-party data center developers were behind schedule, negatively impacting the company’s fourth-quarter outlook.

Of course, we can’t rule out the possibility that CoreWeave will be a long-term winner in the rapidly growing AI infrastructure space. Currently, the company’s soaring order backlog indicates that customers are desperate for the company’s capacity. Still, the risks appear to be growing as quickly as the revenue.

So, is this growth stock a buy today? With the stock trading at a price-to-sales ratio of nearly 10, I personally think it makes sense to wait for a more attractive entry point, even with interest expenses soaring and the company still not turning a profit. Of course, there’s no guarantee we’ll see a more attractive entry point. But I wouldn’t buy into the hype and instead patiently wait for potentially lower prices to better balance risk and potential reward.

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