CoreWeave (CRWV) Stock Drops 30% Despite Winning Major Contracts From OpenAI and Meta

TLDR

• CoreWeave stock fell nearly 30% over five trading days after cutting 2025 revenue guidance from $5.25 billion to $5.1 billion
• The company reported a backlog of $55.6 billion in Q3, up 85% from the prior quarter, including major contracts with OpenAI and Meta
• Despite the pullback, shares remain up over 108% year-to-date on strong AI computing demand
• Wall Street remains divided with 13 Buy, 12 Hold, and 1 Sell rating among 26 analysts covering the stock
• CoreWeave faces profitability challenges with slim 4% operating margins and negative $8 billion free cash flow over the last 12 months

CoreWeave stock took a beating this week. Shares dropped nearly 30% over five trading days after the AI cloud infrastructure company lowered its 2025 revenue outlook during its latest earnings call.

CoreWeave, Inc. Class A Common Stock, CRWV

The company now expects $5.1 billion in revenue for 2025. That’s down from its previous guidance of $5.25 billion. Management blamed delays at a key data center and compute supply constraints for the cut.

The stock traded below $80 this week. That’s getting closer to its March 2025 IPO price of $40. Despite the recent drop, CoreWeave shares are still up more than 108% year-to-date.

The company reported Q3 revenue of $1.36 billion. That’s more than double what it brought in a year ago. But revenue growth alone isn’t telling the whole story.

CoreWeave is burning through cash at a rapid pace. The company posted negative $8 billion in free cash flow over the last 12 months. That massive burn rate comes as the company builds out AI data centers to meet future demand.

The profitability picture isn’t pretty either. CoreWeave’s operating margin came in at just 4% in Q3. A large interest expense on its debt pile pushed net income into negative territory.

Strong Backlog But Margin Questions Remain

The company’s backlog tells a different story. CoreWeave reported $55.6 billion in contracted revenue in Q3. That’s up 85% from the prior quarter.

Major tech companies are locking in capacity for years. OpenAI has committed $22.4 billion in contracts. Meta signed a $14.2 billion deal running through 2031.

Nvidia owns about 7% of CoreWeave. The chip giant also agreed to a $6.3 billion capacity guarantee through 2032. This ensures unused GPUs still generate revenue.

CoreWeave continues to sign new customers. Recent wins include CrowdStrike, Rakuten, Poolside, and Jasper. The demand for AI cloud services remains strong across the board.

But here’s the catch. Some analysts think CoreWeave is winning contracts by undercutting competitors on price. That would explain the slim margins.

Wall Street Split on Next Move

Compass Point analyst Michael Donovan started coverage with a Buy rating and $150 price target. He pointed to the massive backlog and Nvidia’s support as key strengths. Those contracts provide visibility for several years of growth.

J.P. Morgan analyst Mark Murphy took a different view. He downgraded the stock from Buy to Hold. His $110 price target suggests only modest upside from current levels.

Murphy noted that supply issues caused project delays. Some revenue got pushed into later quarters. But he acknowledged the company keeps adding new customers.

Among 26 Wall Street analysts, 13 rate the stock a Buy. Another 12 have Hold ratings. One analyst recommends selling. The average price target sits at $146.17, implying 89% upside from current levels.

CoreWeave now carries a market cap of around $39 billion. The company has taken on debt to fund its rapid infrastructure buildout. That debt comes with growing interest expenses that eat into already thin margins.

The guidance cut appears to be priced into the stock after this week’s selloff. Whether investors see this as a buying opportunity or a warning sign depends on their view of CoreWeave’s ability to improve profitability while maintaining growth.

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