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Yahoo
25 minutes ago
- Yahoo
CoreWeave stock plummets as AI cloud company reports 'deteriorating' operating income outlook
CoreWeave (CRWV) stock plummeted 16% Wednesday after the AI data center company reported a disappointing quarterly outlook for its operating income. The company said the previous day that it expects its third quarter operating income to fall between $160 million and $190 million, below the $192 million expected by Wall Street analysts tracked by Bloomberg. At the same time, the company expects interest expense of $350 million to $390 million during that period. DA Davidson analyst Gil Luria told Yahoo Finance in an email Wednesday that "deteriorating operating income guidance highlights the main issue for CoreWeave - their interest expense is higher than their operating income which means they aren't generating enough profit to pay their debt holders." CoreWeave is one of the largest holders of Nvidia's (NVDA) AI chips and rents its data center capacity to Big Tech firms such as Microsoft (MSFT), Meta (META), and Google (GOOG) as they scramble to power their AI ambitions. CoreWeave stock's performance is closely watched as a metric of AI demand. Most Wall Street analysts are bullish on CoreWeave because they think AI demand will rise at a torrid pace and that tech firms will continue to rely on the company for additional computing power. At the other end of the spectrum, critics say the company is ripe for failure because of its mountain of debt, borrowed at high interest rates, and because its customers could end their contracts with CoreWeave once they finish building their own additional data centers to further their AI goals. Luria noted that its $200 million operating income in the second quarter was already below its interest expense, which came in at $267 million during the period. He said the company's falling operating income and rising cost of debt in the upcoming quarter means the issue 'may be getting worse.' The cloud firm's earnings report also featured earnings below expectations. CoreWeave's loss per share of $0.27 was more than the $0.19 loss expected. At the same time, its revenue of $1.21 billion exceeded analysts' projection of $1.08 billion. CEO Michael Intrator said on the company's post-earnings conference call that there is 'unprecedented demand for our AI cloud services.' Most Wall Street analysts maintained their bullish takes on CoreWeave after the company's second quarter earnings report. Deutsche Bank analyst Brad Zelnick raised his price outlook on shares to $125 from $50 but maintained his Hold rating, saying the stock's drop Wednesday was 'likely more related to anticipation into the lock-up expiration later this week than any new fundamental concerns.' A lockup period prevents company insiders from selling shares in the company for a designated length of time following an IPO. CoreWeave went public in March. Bank of America analyst Brad Sills maintained his Buy rating but lowered his price target to $168 from $185, saying 'Coreweave remains well positioned as a leading AI infrastructure vendor,' but noting uncertainty around its $9 billion acquisition of Core Scientific, which could face regulatory scrutiny, weighing on shares. CoreWeave's quarterly report Tuesday was its second as a public company. The stock's rocky debut was the first real test of the AI trade. Shares slipped in May when the company disclosed a higher than expected capital expenditure outlook for its 2025 fiscal year. Still, the stock is up nearly 222% since its IPO, ahead of the Nasdaq Composite's (^IXIC) 22% gain and the S&P 500's (^GSPC) roughly 14% rise, as investors have piled back into AI stocks due to renewed optimism over future demand for the technology after a rough first half of the year. Laura Bratton is a reporter for Yahoo Finance. Follow her on Bluesky @ Email her at Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Bloomberg
27 minutes ago
- Bloomberg
Bullard on Rate Cut and Possibly Becoming Fed Chair
Jim Bullard, dean of the Mitch Daniels School of Business at Purdue University and former Federal Reserve Bank of St. Louis president, says the Fed will probably lower rates at the next meeting in September and if he were to be named Fed chair he'd work to break up "group think" at the central bank. He speaks on "Bloomberg Open Interest." (Source: Bloomberg)
Bloomberg
27 minutes ago
- Bloomberg
Wells Fargo on Creating Value Through Business Transformation
Ashley Regner, Chief Data Officer, Wells Fargo joins Bloomberg's Diksha Gera to discuss how she has used data to accelerate business results by optimizing business processes and building customer-centric solutions at The Business Value of AI event in Atlanta. (Source: Bloomberg)
