CoreWeave Earnings: No Sign of Demand Slowdown; Profitability Only a Near-Term Concern

Key Morningstar Metrics for CoreWeave

• Fair Value Estimate
  : $106.00
• Morningstar Rating
  : ★★
• Morningstar Economic Moat Rating
  : None
• Morningstar Uncertainty Rating
  : Very High

What We Thought of CoreWeave’s Earnings

CoreWeave CRWV reported solid first-quarter results, with total revenue growing 32% sequentially to $2.1 billion, easily topping guidance. Adjusted operating income of $21 million hit a two-year low, driven by heavy margin pressure from GPU depreciation and data center investments.

Why it matters: All signs point to a robust demand environment for neoclouds. CoreWeave’s remaining performance obligation jumped 49% sequentially to $99 billion. More than 75% of its 2027 capacity is already sold out. Major deals with Meta and Anthropic have yet to ramp up.

• As demand remains strong, supply matters more in defining CoreWeave’s growth. We are glad to see its data center capacity growing faster than expected. Total capacity surpassed one gigawatt this quarter, with contracted capacity growing 400 megawatts to 3.5 gigawatts.

The bottom line: We raise our fair value estimate for no-moat CoreWeave to $106 per share, based on a slightly faster capacity ramp-up and better-than-expected GPU pricing environment. Shares look fairly valued following the stock’s 9% after-hours selloff.

• While we understand the market’s disappointment with CoreWeave’s light margin performance, we think one quarter of profitability miss is acceptable for a high-growth company, given that top-line expansion is the company’s top priority at the moment.
• CoreWeave’s margin dilution primarily stems from installed capacity that has not yet begun generating revenue. Over time, as new capacity under development becomes a smaller part of CoreWeave’s overall fleet, we believe the margin profile will stabilize.

Coming up: Management maintained full-year revenue guidance of $12 billion-$13 billion and adjusted operating margin guidance of $900 million-$1,100 million. Full-year capital expenditure guidance increased by $500 million at the midpoint to $31 billion-$35 billion, potentially due to higher memory prices.