Nvidia-backed CoreWeave shares drop as growing losses eclipse AI demand surge
(REUTERS)CoreWeave shares sank 10% in premarket trading on Wednesday after the Nvidia-backed company posted a bigger-than-expected loss, raising doubts about its ability to keep costs under check amid robust AI demand.Its results underscore the tension between its rapid revenue growth and mounting financial strain as operating expenses jumped nearly fourfold to $1.19 billion in the second quarter.Analysts have turned skeptical of CoreWeave's excessive dependence on certain customers and its ability to grow profitably due to widening losses, heavy capital needs and deteriorating debt coverage.The company on Tuesday posted a net loss of $290.5 million, compared with analysts' average estimate of $190.6 million, according to data compiled by LSEG."CoreWeave does not currently generate enough profit to pay all its debt holders, certainly not equity holders," D.A. Davidson analysts said.The company had around $8 billion in debt as of last year and had said in March that it would use about $1 billion of the IPO proceeds to repay debt.CEO Michael Intrator said the company is scaling rapidly to meet "unprecedented demand for AI", but noted that "accessing power shells capable of delivering the scale of infrastructure our clients require" remains the biggest constraint.CoreWeave operates 33 AI data centers in the United States and Europe, offering access to backer Nvidia's GPUs, which are highly sought after for training and running large AI models.Surging demand for its AI infrastructure helped the company top quarterly revenue estimates. Its stock price has jumped nearly three-fold since its IPO in March.Investors will seek clarity on the lock-up period related to the company's IPO, which could expire later this week compared to the typical six-month time frame.Sometimes, a stock is pressured when the lock-up ceases.
Barclays analysts said the company's operating cash flow and capital expenditure for the quarter could be scrutinised going into the lock-up expiry.
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Middle East Eye
an hour ago
- Middle East Eye
Israel approves plan to build 3,401 houses splitting West Bank into two
Israeli far-right Finance Minister Bezalel Smotrich has approved plans for splitting East Jerusalem from the occupied West Bank, a move his office said would "bury the idea" of a Palestinian state, Reuters news agency has reported. In a statement headlined "Burying the idea of a Palestinian state," Smotrich's spokesperson said the minister would give a press conference later on Thursday about the plan to build 3,401 houses for Israeli settlers between an existing settlement in the West Bank and Jerusalem. Israeli Prime Minister Benjamin Netanyahu speaks with Minister of Finance Bezalel Smotrich during the weekly cabinet meeting at the Defence Ministry in Tel Aviv, Israel on 7 January 2024 (Reuters)
Al Etihad
5 hours ago
- Al Etihad
Dollar struggles as Fed rate-cut bets build, bitcoin soars to record
14 Aug 2025 10:38 TOKYO (Reuters) The US dollar languished at multi-week lows versus major peers on Thursday as traders ramped up bets for the Federal Reserve to resume reducing interest rates next greenback fared worst against the yen after US Treasury Secretary Scott Bessent suggested the Bank of Japan needs to hike rates again soon, while the Fed cuts expectations for monetary easing, combined with increasing institutional cryptocurrency investment, powered bitcoin to a fresh record dollar gained after data showed the labour market to be surprisingly was a different story than the US, where Fed rhetoric has turned broadly more dovish on signs of a cooling labour market, while President Donald Trump's tariffs are yet to add to price pressures in a significant see a Fed rate cut on September 17 as a near certainty, according to LSEG data, and even lay around 7% odds on a super-sized half-point reduction."For the markets, it's not even a matter of if the Fed cuts interest rates in September, it's a question of how much," said Kyle Rodda, an analyst at of a downturn in the labour market have pushed futures to bake in a series of rate cuts before the end of the year."The Fed also continues to be under intense political pressure to has repeatedly criticised Fed Chair Jerome Powell for not cutting rates sooner, even threatening to oust him before Powell's term expires in Secretary Scott Bessent on Wednesday called for a "series of rate cuts," and said the Fed could kick off the policy easing with a half-point also said the BOJ had gotten "behind the curve" by delaying rate hikes."Bessent's comments are having a strong impact on USDJPY," said Norihiro Yamaguchi, an economist at Oxford the same time, "gains in the yen are being accelerated by low liquidity in the market as fewer market participants are around this week" due to the Obon holiday, he US dollar dropped as much as 0.7% to 146.35 yen on Thursday, its weakest since July edged up enough to reach its highest since July 24 at $ euro hovered at $1.1703, just below Wednesday's peak of $1.1730, a level last seen on July a weaker US dollar, the spectre of political interference in central bank policy, and the increase in investor risk appetite amid Fed easing prospects all converged to buoy bitcoin to its first record peak since July world's leading cryptocurrency pushed as high as $124,480.82 in the latest session, before last changing hands at around $123, was already underpinned by increased institutional money flows this year in the wake of a spate of regulatory changes spearheaded by Trump, who has billed himself the "cryptocurrency president."In the latest move, an executive order last week paved the way to allow crypto assets in 401(k) retirement accounts."Corporate treasuries like MicroStrategy and Block Inc. continue to buy bitcoin," said IG analyst Tony Sycamore."Technically, a sustained break above $125,000 could propel bitcoin to $150,000."The Australian dollar advanced as much as 0.4% to the highest since July 28 at $0.65685, although it later trimmed those gains to stand at $ employment rebounded in July as firms took on more full-time workers, pulling the jobless rate down from a 3-1/2-year high. The upbeat report implied there was less urgency for the Reserve Bank of Australia to follow up this week's rate cut with another in September.
Tahawul Tech
5 hours ago
- Tahawul Tech
Trump reportedly wanted 20% of Nvidia's H20 China sales
US President Donald Trump reportedly wanted a 20% cut of Nvidia's H20 chip China sales, but eventually settled for 15% after negotiations with their CEO Jensen Huang. CNBC reported President Trump outlined the higher asking price during a press conference in Washington DC on August 11th. The news agency stated Huang met with Trump at the White House on 8 August. AMD is also allowed to sell its AI chips to China under the same terms. The Nvidia decision was a reversal of the Trump administration's previous posture of not allowing exports of the chip due to national security issues and concern the US is losing its technological AI advantage to China, which led to a plan in April to require the licences. Last month, the decision to reopen sales to China drew opposition from security experts and politicians in the US. CNBC reported President Trump stated Nvidia's H20 is an 'old chip that China already has' and is 'obsolete'. President Trump also said he would not allow Nvidia's flagship Blackwell chip to be sold in China without significant downgrades, including a 30 per cent to 50 per cent reduction in performance. 'The Blackwell is super-duper advanced. I wouldn't make a deal with that,' Trump said, adding 'They won't have it for five years.' Source: Mobile World Live Image Credit: Nvidia
