Is CoreWeave Stock a Buy on the Dip as Revenue Continues to Skyrocket?

Shares of **CoreWeave **(CRWV 11.40%) sank following the company’s first-quarter earnings announcement despite the neocloud company reporting another quarter of massive revenue growth and a swelling backlog. However, its adjusted earnings-per-share (EPS) loss was more than anticipated, and its Q2 guidance fell short of expectations. The stock is still up more than 60% year to date as of this writing.

Let’s dive into CoreWeave’s results to see if this dip in the growth stock is a buying opportunity.

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NASDAQ: CRWV

CoreWeave

Today’s Change

(-11.40%) $-14.69

Current Price

$114.15

Key Data Points

Market Cap

$63B

Day’s Range

$110.55 - $123.75

52wk Range

$52.90 - $187.00

Volume

48M

Avg Vol

28M

Gross Margin

34.82%

Project backlog continues to build

CoreWeave once again saw its revenue more than double, climbing 112% to $2.08 billion from $982 million a year ago. That came in ahead of the $1.97 billion analyst consensus, as compiled by LSEG. However, its adjusted EPS loss grew to $1.12 and was wider than the $0.91 loss analysts had expected.

One issue weighing on the stock is higher component costs. Due to this, the company raised the low end of its full-year capital expenditure (capex) budget to a range of $31 billion to $35 billion, from a prior outlook of $30 billion to $35 billion. Some investors have already questioned the economics of cloud computing and the artificial intelligence (AI) infrastructure build-out, so higher component costs only add fuel to that fire.

Despite higher losses and increasing component costs, CoreWeave’s project backlog continues to balloon, reaching nearly $100 billion. During the quarter, the company signed multiple new agreements with Meta Platforms, including a $21 billion commitment in March. It also received commitments from Anthropic and expanded deals with existing customers, including Mistral and Cohere.

To help fund its build-out, the company has raised more than $20 billion in debt and equity. This includes an $8.5 billion delayed draw term non-recourse loan and a $2 billion equity investment from Nvidia. Non-recourse means the loan is secured by a specific asset, and a lender cannot pursue any other company assets in the case of default.

The company guided for Q2 revenue to be in a range of $2.45 billion to $2.6 billion, below the $2.69 billion consensus. It maintained its full-year guidance for revenue of between $12 billion and $13 billion. It is still expecting to achieve a $30 billion annual revenue run rate by the end of 2027.

Image source: The Motley Fool.

Should investors buy CoreWeave stock on the dip?

CoreWeave is a highly leveraged way to play the data center AI infrastructure boom. Unlike the big three cloud providers, Amazon, Microsoft, and Alphabet, it’s not generating a lot of cash flow to pay for its build-out, so it’s going to have to take on a lot of debt. It also doesn’t have any of its own custom silicon, and as such, relies on off-the-shelf graphics processing units (GPUs) and other chips. That makes it a bit more vulnerable to rising component prices than some others in the cloud computing space.

Overall, CoreWeave is a highly speculative stock. Its model could work as it scales, but it’s not the way I’d want to play the AI infrastructure boom.