Finance
CoreWeave shares drop as growing losses eclipse AI demand surge
Published by Global Banking and Finance Review
Posted on August 13, 2025
2 min readLast updated: January 22, 2026
Global Banking and Finance Review
Company
Published by Global Banking and Finance Review
Posted on August 13, 2025
2 min readLast updated: January 22, 2026
CoreWeave shares fell 10% as financial losses overshadow AI demand. Analysts question its profitability and debt management.
By Rashika Singh
(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.
"This continues to be a business that is not worth scaling," D.A. Davidson analysts said.
CoreWeave operates 33 AI data centers in the U.S. 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 scrutinized going into the lock-up expiry.
(Reporting by Rashika Singh in Bengaluru; additional reporting by Lance Tupper in New York; Editing by Arun Koyyur)
An IPO lock-up period is a predetermined time frame following a company's initial public offering during which major shareholders are restricted from selling their shares. This is intended to prevent market flooding and stabilize stock prices.
Operating expenses are the costs associated with running a business's core operations, excluding direct production costs. They include rent, utilities, salaries, and other day-to-day expenses necessary for business functioning.
A net loss occurs when a company's total expenses exceed its total revenue during a specific period. This indicates that the company is not profitable and may face financial challenges.
Debt coverage refers to a company's ability to pay its debt obligations. It is often measured using ratios like the debt service coverage ratio, which compares cash flow available to debt payments.
Financial strain refers to the pressure a company experiences when its expenses exceed its income, leading to difficulties in meeting financial obligations, such as paying debts or operational costs.
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