CoreWeave Crashes 19% After Earnings Reveal a $35 Billion Spending Gamble

CoreWeave, the Nvidia-backed GPU cloud company that Wall Street once treated as a pure play on AI infrastructure demand, lost nearly a fifth of its market value on Thursday after reporting fourth-quarter earnings that showed a business growing fast and bleeding even faster.

The numbers tell a story the market didn't want to hear: revenue doubled, but losses quadrupled. And the company's proposed remedy - spending up to $35 billion this year on new data centers - spooked investors already wary of the broader AI infrastructure spending arms race.

The Damage

Revenue beat consensus by a hair. Everything else missed - badly. The net loss hit $452 million, driven by $388 million in interest expense alone. That's what it costs to finance a GPU fleet when your debt pile stands at $21.37 billion and your debt-to-equity ratio is 894%.

"We made the decision intentionally to go ahead and build more faster, and that is being driven by the fact that our clients are desperate to get access to more infrastructure faster," CEO Michael Intrator told CNBC. "It puts some short-term pressure on the margins."

Short-term pressure is one way to describe it. Negative levered free cash flow of $5.27 billion on a trailing basis is another.

CoreWeave plans to more than double its data center capacity in 2026, spending up to $35 billion on GPU-packed facilities.

The Bet

$35 billion in one year

CoreWeave plans to spend between $30 billion and $35 billion in capital expenditure this year - more than doubling the $14.9 billion it spent in 2025. To put that in context, the entire company went public in March 2025 raising $1.5 billion. It now plans to deploy more than twenty times that amount in a single calendar year on GPU-packed data centers.

The thesis is straightforward: demand for AI compute is insatiable, and every dollar spent now will create multiples in future revenue. The company points to $66.8 billion in remaining performance obligations - long-term contracts that theoretically guarantee years of revenue - as proof the spending is backed by real demand.

Customer concentration

But dig into who's signing those contracts, and the picture narrows considerably. Microsoft represented 62% of CoreWeave's revenue in 2024, and the top two customers collectively accounted for 77% of sales. Meta's $14.2 billion contract backs a proposed $8.5 billion syndicated bank loan. OpenAI accounts for a significant share of new bookings.

The diversification story is thinner than it appears. Nearly all of Microsoft's reserved CoreWeave capacity has been used to support OpenAI workloads. The roughly $15 billion in direct deals between OpenAI and CoreWeave simply cut out the middleman.

Counter-Argument

The bull case still has teeth

CoreWeave isn't making this bet in a vacuum. Nvidia injected an additional $2 billion into the company in January 2026 at $87.20 per share - effectively signaling that the chipmaker's most important cloud partner is not allowed to fail. The company's GPU fleet is spoken for years in advance, and management projects a revenue run rate exceeding $30 billion by the end of 2027.

Intrator told investors on the earnings call that stabilized facility margins sit in the mid-20% range. The current margin compression, he argues, reflects the cost of bringing new capacity online rather than a fundamental problem with the business model.

"Our margins reflect the cost of building tomorrow's revenues. As there are more infrastructure online, that will come to bear."

Several analysts maintained or raised their price targets after the report. DA Davidson, Cantor Fitzgerald, and Citizens JMP all reaffirmed bullish outlooks, and the full-year 2026 revenue guidance of $12 billion to $13 billion roughly matched consensus.

Nvidia's $2 billion investment in CoreWeave signals the chipmaker's commitment to keeping its largest cloud partner afloat.

The bear case is about timing

But Moody's has flagged that CoreWeave will remain cash flow negative for at least the next 18 months. The company went public less than a year ago at $40 per share. Its stock hit $183.58 in June 2025 during peak AI euphoria, then crashed back to the $70s as the infrastructure spending narrative soured late last year. Even before Thursday's drop, shares were sitting 51% below that all-time high.

The question isn't whether there is demand for AI compute. There clearly is. The question is whether a company carrying $21.37 billion in debt, burning $5.27 billion in free cash flow, and planning to triple its annual capex can survive long enough for the economics to work.

The Bigger Picture

CoreWeave's earnings drop into a market that has already made up its mind about which side of AI it wants to own. The iShares Expanded Tech-Software ETF (IGV) is down nearly 23% year-to-date, with 97 of its 110 constituents trading below their 200-day moving average. Nvidia itself has gone negative for 2026, extending a post-earnings slide that began after posting record revenue of $68 billion.

The infrastructure buildout that was supposed to be the safest way to play AI is now being interrogated as aggressively as the software companies it was meant to displace.

CoreWeave closed Thursday at about $66, down 18.6% on the day - a $9 billion evaporation in market cap. Barclays expects the stock to pause near these levels as investors "gauge the spending changes."

The market can tolerate aggressive spending when it comes with clean execution and improving margins. CoreWeave delivered the opposite: accelerating investment with declining profitability and a first-quarter guidance miss that suggests the revenue flywheel isn't spinning as fast as the capex flywheel. Nvidia's $2 billion backstop buys time, but it doesn't buy proof that this model works at scale. The next two quarters will determine whether CoreWeave's $35 billion bet is visionary or terminal.

Sources:

• CoreWeave CEO defends spending plans, tries to combat debt narrative as stock plummets 18% - CNBC
• Why CoreWeave Stock Was Tumbling Today - The Motley Fool
• CoreWeave slides as quarterly revenue guidance disappoints - CNBC
• CoreWeave Q4 Earnings: Navigating the $55 Billion AI Backlog - FinancialContent
• NVIDIA Invests $2 Billion in CoreWeave to Accelerate AI Factory Buildout - Fintool
• Why Is CoreWeave Stock Down? Rising Debt and Wider Loss - Tokenist
• The Software Crash In Numbers - Benzinga