CoreWeave

What’s the most exciting initial public offering (IPO) of 2025? My vote would go to CoreWeave (CRWV -3.25%). Its IPO was the biggest for a tech stock since 2021.

Sure, CoreWeave had to lower its planned IPO share price. However, that was due more to broader market headwinds than anything related to the company itself. At any rate, CoreWeave stock has nonetheless performed exceptionally well. It ranks among the biggest large-cap winners of the year.

But that’s all water under the bridge now. Where will CoreWeave stock be in five years?

Image source: Getty Images.

CoreWeave’s future largely hinges on three key factors

To make an educated guess about CoreWeave’s prospects, we have to first understand its business. The company is one of a handful of artificial intelligence (AI) hyperscalers. Its sole focus is providing infrastructure designed to support the workloads of AI systems, especially generative AI applications.

The most important factor affecting where CoreWeave stock will be in 2030 is almost certainly how strong the demand for AI infrastructure will be through the rest of the decade. As of right now, the prognosis looks great. Exhibit A is that CoreWeave’s revenue more than tripled year over year in its latest quarter.

Next on the list, in my view, is how well CoreWeave can keep up with the demand. CEO and co-founder Michael Intrator said in the company’s Q2 update, “We are scaling rapidly as we look to meet the unprecedented demand for AI.” Such a massive buildout is expensive. That’s the main reason CoreWeave remains unprofitable.

Electricity supply could also be a constraint. Consulting giant Deloitte estimates that power demand from U.S. AI data centers could skyrocket more than 30x by 2035 to 123 gigawatts.

CoreWeave’s future hinges on a third factor, too: competition. The hyperscaler’s rivals include some of the biggest companies on the planet with exceptionally deep pockets. If AI infrastructure demand slows, the competitive threats could become more pronounced.

Potential scenarios

With those factors in mind, let’s explore a few potential scenarios for CoreWeave. I’ll start with the most optimistic one.

An explosion in AI infrastructure demand fueled by AI advances

The AI demand we’ve seen thus far could be only the tip of the iceberg. Agentic AI remains in its early stages of adoption. Artificial general intelligence (AGI) and artificial superintelligence (ASI) aren’t the stuff of science fiction anymore. Major companies are investing heavily in developing these game-changing AI breakthroughs.

In this scenario, CoreWeave’s growth would be impressive. The company could probably generate revenue of over $200 billion in 2030. At the current average price-to-sales ratio of 8 for the internet services and infrastructure industry, that would translate to a market cap for CoreWeave of at least $1.6 trillion — a gain of roughly 23x in five years.

One wrinkle in this scenario, though, is that the biggest hyperscalers could view CoreWeave as an attractive acquisition target to boost their own capacity. The purchase price would depend on the timing of such a potential buyout: The earlier in the AI infrastructure explosion, the less expensive acquiring CoreWeave would be.

Solid AI infrastructure demand growth

In this scenario, AI infrastructure demand continues to grow at a robust (although not explosive) pace. We probably wouldn’t see AGI or ASI emerge over the next five years. However, agentic AI could gain more widespread adoption.

I think CoreWeave could realistically rake in revenue in the ballpark of $60 billion in this scenario. That number reflects an increase of around 12x from Wall Street’s consensus revenue estimate for 2025. Using the average industry P/S multiple of 8, that would put CoreWeave’s market cap at $480 billion or so. Its share price would need to grow nearly 7x to hit that mark.

Weak AI infrastructure demand growth

Now, let’s suppose AI infrastructure demand tapers off dramatically. This scenario would likely be devastating for CoreWeave. Its stock already has significant growth baked into the share price with a P/S ratio of 19.

If CoreWeave fell to the current industry average P/S multiple, its stock could plunge by at least 50%. However, I suspect that the average would itself decline quite a bit if AI infrastructure demand slowed to a crawl. A decline of 70% or more for CoreWeave’s share price probably wouldn’t be out of the question in this scenario.

A prediction for CoreWeave in 2030

The easiest prediction for CoreWeave in 2030 is to go with something along the lines of the middle-of-the-road scenario mentioned above. Even if that scenario is still overly optimistic, I could easily see CoreWeave being worth at least $200 billion by the end of the decade. A gain of almost 3x in just five years isn’t too shabby.

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Shares of CoreWeave (CRWV 12.34%) jumped after the company filed an 8-K detailing a fresh order with Meta Platforms.

The agreement initially commits up to $14.2 billion of spend through Dec. 14, 2031, “with the option to materially expand its commitment through 2032 for additional cloud computing capacity”– sending the GPU-cloud provider’s stock higher as investors digested the scale and duration of the commitment. Shares climbed as much as 16.4%, but were up about 13% as of noon ET.

Image source: Getty Images.

Massive dealmaking

The new order sits under an existing master services agreement and provides Meta access to CoreWeave’s reserved artificial intelligence (AI) compute capacity. In plain English, Meta is locking in a lot of high-end GPU cloud for years, with room to grow. That should help CoreWeave diversify beyond its biggest ecosystem relationships and improve revenue visibility through 2031, with a possible step-up in 2032. It also signals that hyperscale AI buyers continue to secure multiyear capacity, a trend that can move shares quickly when deals are disclosed.

Importantly, this Meta news comes just days after CoreWeave and OpenAI expanded their own agreement by up to $6.5 billion. That Sep. 25 update increased OpenAI’s long-term commitments with CoreWeave and extended the relationship through 2031. Taken together, the two back-to-back announcements highlight how CoreWeave is steadily locking in multibillion-dollar, multiyear partnerships with the most important AI developers.

Valuation and the long view

The business clearly has momentum — and today’s Meta order strengthens the backlog and diversifies demand. That said, after a string of headline contracts and a sharp rebound in the share price, the stock appears priced for perfection. We’re talking about a cyclical company with a market capitalization of $68 billion that is still reporting losses.

Of course, we can’t rule out a scenario in which fundamentals do exceed expectations. But this will depend on the speed of future capacity ramps and market demand over the next five years — two very unpredictable factors.

Overall, in a capital-intensive, fast-moving market where supply chains, customer concentration, and hardware cycles can shift quickly, patience is probably a good idea. At a lower price, the stock might make sense. But after its recent run-up, it’s probably worth staying on the sidelines.

Shares of cloud infrastructure player CoreWeave (CRWV 12.90%) were trading 15% higher as of 10:50 a.m. ET Tuesday. The stock price jump came after the company announced a new $14.2 billion deal with Meta Platforms.

Continuing to strike deals

In a regulatory filing Tuesday morning, CoreWeave announced that it had expanded its deal with Meta Platforms: It will provide cloud computing capacity to the social media giant through 2031 for $14.2 billion. Meta also has “the option to materially expand its commitment through 2032 for additional cloud computing capacity under the Order Form.”

Image source: Getty Images.

CoreWeave builds and operates data centers equipped with the latest graphics processing units (GPUs) from Nvidia, and rents out capacity on its machines largely to companies that use it to power and train artificial intelligence (AI) applications. Many of the hyperscalers in the “Magnificent Seven” have high demand for this type of processing capacity. “The agreement underscores that behind every AI breakthrough are the partnerships that make it possible,” a CoreWeave spokesperson told CNBC.

CoreWeave has had a good couple of weeks. It recently expanded its deal with OpenAI, the company behind ChatGPT, for an additional $6.5 billion. Meta CEO Mark Zuckerberg has previously vowed to spend hundreds of billions of dollars on new data centers to help power his company’s AI ambitions.

Good as long as the party continues

As long as companies keep spending on AI infrastructure, CoreWeave is going to benefit. How long the party will continue is another question. CoreWeave is fast approaching a $70 billion market cap, but it is not yet profitable and trades at about 13 times forward expected sales. It also has a debt-to-equity ratio of more than 8.3, which is high.

All of this makes me a bit cautious on CoreWeave, despite the high-profile agreements it has signed recently. Due to the state of its balance sheet, its valuation, and the possibility of a slowdown in AI capital expenditures, I wouldn’t recommend investing too much of your portfolio in the stock.

Nvidia (NVDA 3.52%) has built an artificial intelligence (AI) empire thanks to the dominance of its AI chips and its expansion into a wide variety of other related offerings. But the company isn’t isolating itself, and instead, has looked to work with others — even much smaller players — in this AI boom. One company in particular has become a key Nvidia ally, and that’s CoreWeave (CRWV 0.39%).

CoreWeave launched an initial public offering in March, and the stock has since surged about 195%, buoyed by the company’s soaring sales — and its relationship with Nvidia. The AI chip giant held a 7% stake in CoreWeave as of the end of the second quarter, and CoreWeave makes up 91% of Nvidia’s investment portfolio. And CoreWeave’s business relies heavily on Nvidia as the company’s specialty is the following: It rents out Nvidia’s high-powered graphics processing units (GPUs) to customers through its cloud platform.

Now, Nvidia’s latest move — a $6.3 billion deal with CoreWeave — signals something big for shareholders of both companies. Let’s take a closer look.

Image source: Getty Images.

A 1,300% gain

First, though, a quick summary of the businesses of Nvidia and CoreWeave. As mentioned, Nvidia is the AI chip leader, with its GPUs and related products delivering record revenue and earnings over the past few years. Nvidia’s chips offer the highest performance on the market, so tech giants, prioritizing AI success, have rushed to get in on these essential tools. All of this has helped Nvidia stock climb 1,300% over the past five years — and pushed market value past $4 trillion to make Nvidia the world’s biggest company.

CoreWeave, as mentioned, offers customers access to Nvidia compute through its cloud platform. Customers may rent GPUs by the hour or for the long term, and this offers them great flexibility. CoreWeave holds about 250,000 GPUs across 32 data centers and has been the first to make Nvidia’s latest innovations generally available. All of this has translated into outsized revenue growth, with sales tripling in the latest quarter. CoreWeave clearly depends on Nvidia’s success as demand for Nvidia GPUs power its revenue higher — if demand were to decline, not only would Nvidia suffer, but so would CoreWeave.

And this brings me to the latest deal between the two companies. Nvidia signed a $6.3 billion order with CoreWeave, ensuring that the chip leader will buy any cloud capacity that CoreWeave is unable to sell to customers. The deal, extending a 2023 agreement, covers the period through April 13, 2032.

Eliminating a risk

This order signals something different — but significant — for both companies and their shareholders. For CoreWeave, this removes the big risk of the company being stuck with excess capacity. Though the future of AI spending looks bright, any dip in spending, even over a short period, could be costly for the company. So, Nvidia’s agreement to potentially step in means that if any drop in demand happens, it won’t hurt CoreWeave’s sales. As a result, shareholders may breathe a sigh of relief, and cautious investors who have worried about this risk may consider getting in on CoreWeave.

As for Nvidia, this move suggests the company truly is confident about the demand for AI capacity over the next several years. It’s unlikely the tech giant would agree to such a deal if it saw a major slowdown on the horizon. This reinforces Nvidia’s prediction a few weeks ago that AI infrastructure spending may reach $4 trillion by the end of the decade. Nvidia has said in the past that its customers offer it visibility about their upcoming needs — so the chip designer has a good idea of how the demand situation will evolve.

All of this means this latest deal between Nvidia and CoreWeave is fantastic news for shareholders of both companies — for CoreWeave, the agreement lowers risk, and for Nvidia, the agreement confirms that demand for AI is going strong.

Considering this, both of these companies make great AI stocks to buy and hold onto as this AI growth story develops.

CoreWeave (CRWV 1.92%) stock got hit with a double-digit sell-off over the last week of trading. The company’s share price fell 13.5% from its level at the previous week’s market close.

CoreWeave saw a valuation pullback due to some hesitance about growth-dependent valuations for artificial intelligence (AI) companies. The stock also saw sell-offs in conjunction with news that the company is on track to acquire another player in the AI space. CoreWeave is still up roughly 123% from its price at market close on the day of its initial public offering earlier this year, but it’s also down 51.5% from its high.

Image source: Getty Images.

CoreWeave stock slips on valuation and acquisition concerns

Investors have recently been taking a more cautious approach to valuations for some companies in the AI space, and CoreWeave stock has seen sell-offs in conjunction with the trend. Investors also apparently haven’t been thrilled with some of the company’s planned acquisition moves.

On Sept. 3, CoreWeave published a press release announcing that it had entered into definitive terms to acquire OpenPipe — a company that specializes in the training of AI agents. Specifics of the buyout were not included in the press release. Investors were also seemingly unimpressed when CoreWeave announced in July that it planned to acquire Core Scientific in a $9 billion all stock deal.

What’s next for CoreWeave?

While many new AI companies will be launched over the next decade, the artificial intelligence market is also likely to see a very high amount of consolidation across the stretch. Buying companies that can complement its own technologies and product offerings and reduce operating costs through synergies could wind up being a great move for CoreWeave, but it’s also not surprising that the stock has seen big pullbacks in response to recent acquisition and financing news.

In addition to the all-stock buyout proposed with Core Scientific and the potential for new stock to be used to fund the OpenPipe buyout, CoreWeave has also announced other plans to sell large blocks of new stock in order to raise funds. This raises some questions about whether the company has thought that its stock was overvalued in a way that made new stock sales and stock-backed buyouts attractive, and the new share sales and related deals mean that existing shareholders are seeing the value of their stakes diluted.