CoreWeave plunges on $35 bn spending surge despite revenue beat

Shares of CoreWeave tumbled more than 8 per cent in after-hours trading on Thursday after the Nvidia-backed AI cloud infrastructure firm unveiled plans to nearly double capital expenditure this year, even as it posted a modest fourth-quarter revenue beat.

The stock is now down about 8 per cent so far this year, as investors weigh aggressive expansion plans against swelling losses and delivery risks tied to its massive order backlog.

Capex to hit up to $35 billion

CoreWeave said it expects capital expenditure of between $30 billion and $35 billion in 2026, sharply higher than the $14.9 billion it spent in 2025. The surge will be driven largely by purchases of advanced AI chips from Nvidia, rapid data centre expansion, and the energy procurement required to power them.

Chief executive Michael Intrator told Reuters the company had opted to accelerate its buildout to meet surging customer demand for AI compute.

“We made the decision to go ahead and to build faster so that we can deliver more infrastructure,” Intrator said, acknowledging that the push would weigh on margins in the near term.

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Adjusted operating income margin fell to 6 per cent in the December quarter, down from 16 per cent a year earlier. Intrator described the first quarter as likely to mark the low point for margins before a recovery later in the year.

Chief financial officer Nitin Agrawal said all planned capital spending was tied to already signed customer contracts, offering some visibility into future revenue streams.

Losses widen despite revenue beat

CoreWeave reported fourth-quarter revenue of $1.57 billion, slightly ahead of expectations. However, its adjusted net loss ballooned to $284 million in the quarter ended December 31, compared with a loss of $36 million a year earlier, reflecting the heavy upfront investment in infrastructure.

For the first quarter, the company forecast revenue between $1.9 billion and $2.0 billion — below analysts’ estimates of $2.29 billion, according to LSEG data — adding to investor concerns over near-term growth momentum.

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$66.8 billion backlog under scrutiny

The company’s revenue backlog surged to $66.8 billion as of December 31, up from $15.1 billion a year earlier, fuelled by long-term cloud-compute agreements. Management said 70 per cent of the backlog now comes from financially strong, low-risk customers, as it works to diversify its client base.

Still, the backlog is contingent on CoreWeave bringing data centre capacity online on schedule and meeting delivery obligations — a complex task amid soaring global demand for AI infrastructure.

By the end of 2025, CoreWeave had more than 850 megawatts of active power capacity across 43 data centres, with 3.1 gigawatts contracted — most of which it expects to be operational by 2027.

“Right now, CoreWeave is being punished for either having too little capex or too much capex,” said Alexander Platt, an analyst at D.A. Davidson. “The fact they’re not seeing issues bringing capacity online — hence the high capex — is a positive signal.”

Competing with big tech firepower

CoreWeave operates as a so-called “neo-cloud”, providing AI labs and enterprises with access to dedicated clusters of Nvidia’s advanced graphics processing units (GPUs), without having to share capacity as they might on hyperscale platforms.

It competes with deep-pocketed technology giants such as Microsoft and Alphabet, whose cloud arm Google is a major AI infrastructure player. Collectively, big tech companies are expected to spend at least $630 billion this year on AI-related infrastructure, intensifying competition.

Unlike its larger rivals, CoreWeave offers clients exclusive access to entire GPU clusters, a proposition that has resonated with AI startups and large enterprises seeking predictable performance for model training and deployment.

Debt and cost of capital in focus

As of September last year, CoreWeave’s debt stood at around $14 billion. Management said it is working to lower financing costs as it scales, citing improving access to cheaper capital.

“We expect to continue to reduce our weighted average cost of capital along the way,” Intrator said.

With inputs from agencies.