Should You Hold or Sell CRWV Stock Before Q2 Earnings Release?
The Zacks Consensus Estimate for the bottom line in the to-be-reported quarter is pegged at a loss of 23 cents. The estimate has been unchanged in the past 60 days. The consensus estimate for total revenues is pinned at $1.08 billion.
This is CoreWeave's second earnings release since it started trading as a listed company on March 28, 2025. CoreWeave is an AI-focused infrastructure company and its cloud platform has been developed to scale, support, and accelerate GenAI.
In the last reported quarter, CRWV reported a loss of $1.49 per share, which was much wider than a loss of 62 cents in the year-ago quarter. Loss per share includes $177 million of stock-based compensation expense for awards with a liquidity-event performance-based vesting condition, which was satisfied at IPO. Adjusted net loss for the quarter was $149.6 million compared with $23.6 million a year ago.
What Our Model Predicts for CRWV's Q2
Our proven model does not conclusively predict an earnings beat for CRWV this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. But that is not the case here. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.
CRWV has an Earnings ESP of 0.00% and a Zacks Rank #4 (Sell). You can see the complete list of today's Zacks #1 Rank stocks here.
Factors to Focus on Ahead of CRWV's Q2 Earnings
Amid the AI infrastructure boom, increasing demand for CoreWeave's cloud software and infrastructure services is likely to have driven the top-line performance. In the last reported quarter, CRWV's revenues jumped 420% year over year, ending the quarter with a backlog of $25.9 billion.
Besides a $11.9 billion deal with OpenAI, CRWV has added several new enterprise customers and a hyperscaler client in the last reported quarter. It also signed expansion agreements with many customers, including a $4 billion expansion with a big AI-enterprise customer. CRWV added that the $4 billion expansion agreement signed with a big AI client will be reflected in revenue backlog beginning in the second quarter.
In addition to scaling capacity and getting adequate financing for infrastructure, CRWV is also expanding its go-to-market capabilities. Moreover, the buyout of the Weights and Biases acquisition has added 1,400 AI labs and enterprises as clients for CoreWeave. Building on this, the company unveiled three major offerings in June, which aim to help AI teams develop, deploy and iterate faster by combining CoreWeave's cloud infrastructure with Weights & Biases' developer platform.
CoreWeave also boasts a growing data center network across the United States and Europe. It has a network of 33 purpose-built AI-data centers across the United States and Europe, supported by 420MW of active power. In July, it announced $6 billion to build a new state-of-the-art AI data center in Lancaster, PA, with an initial capacity of 100 megawatts (MW) and a potential to scale up to 300MW. The Lancaster facility will add to the company's 1.6 gigawatt (GW) of contracted power, offering a multiyear runway in power capacity. CRWV's collaboration with NVIDIA Corporation bodes well. CRWV implements the latter's GPU technologies at scale.
Nonetheless, CRWV faces plenty of challenges. CoreWeave faces tough competition in the AI cloud infrastructure space, which boasts behemoths like Amazon AMZN, Microsoft MSFT and other pure play AI infra companies like Nebius NBIS. Amazon Web Services and Microsoft's Azure cloud platform together dominate more than half of the cloud market. With everyone vying for a share of the lucrative market, client acquisition gets increasingly difficult.
CRWV's aggressive capital deployment strategy is a key concern. CRWV expects capex to be between $20 billion and $23 billion for 2025 due to accelerated investment in the platform to meet customer demand. High capex, even with a success-based model, exposes CoreWeave to execution risks if contract revenue does not materialize on time. For the second quarter, capex is forecast to be $3 billion to $3.5 billion. CoreWeave's aggressive data center buildout is being funded in part by debt. CoreWeave issued $2 billion in new notes in May and followed that with this $1.75 billion issuance again in July. It also recently closed a $2.6 billion delayed draw term loan facility ('DDTL 3.0 Facility') to ramp up delivery of services for OpenAI and boost its infrastructure footprint.
Interest expense is expected to remain elevated, at $260-$300 million in the second quarter. Higher interest expenses can exert pressure on the adjusted net income and potentially affect free cash flow generation. CRWV also anticipates stock-based compensation to remain slightly higher in 2025 for the grants issued about the IPO.
CoreWeave's 77% of total revenues in 2024 came from the top two customers. This intense customer concentration is a major risk, especially if the client migrates; the revenue impact could be material. Apart from this evolving trade policy, macro uncertainty and volatility remain additional headwinds.
Analysts have kept their earnings estimates unchanged for CRWV's bottom line over the past 60 days.
Image Source: Zacks Investment Research
CRWV Stock Performance
CRWV shares have lost 27.2% in the past month. The stock has declined sharply post its announcement of $ 9 billion takeover of Core Scientific. Since the announcement on July 7, CRWV has lost 31%.
Price Performance
Image Source: Zacks Investment Research
It has significantly underperformed the 4.7% gain of its Internet Software industry and the 1.6% of the Zacks S&P 500 composite. The broader Computer and Technology Sector has risen 3.6% over the same time frame.
AMZN, MSFT and NBIS have gained 1.3%, 5.7% and 16.9%, respectively, over the same time frame.
Lofty Valuation for CRWV
Valuation-wise, CoreWeave seems overvalued, as suggested by the Value Score of F. In terms of Price/Book, CRWV shares are trading at 27.76X, way higher than the Internet Software industry's ratio of 6.97X, but it could mean more risk than opportunity.
Image Source: Zacks Investment Research
Investment Thesis for CRWV Stock
The AI infrastructure market continues to expand rapidly in 2025, driven by explosive demand for GPU-intensive applications, including large language models and inference-at-scale workloads. This bodes well for CRWV.
Despite a robust market, CoreWeave faces tremendous competition from Azure, AWS and Google Cloud. Also, customer concentration and huge capex owing to data center expansion remain headwinds.
What Should You Do With CRWV Stock Before Q2?
CoreWeave's heavy customer concentration and ballooning capex pose risk, especially if revenues fall short. The company's elevated interest expenses and continued dilution from stock-based comp add further pressure on margins. With a lofty valuation and weak stock performance, CRWV remains vulnerable heading into the second quarter. Given the unfavorable Zacks Rank, investors would be better off if they offloaded CRWV from portfolios before the second quarter.
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