CoreWeave, the Nvidia-backed cloud computing company, announced on Wednesday that it plans to spend between $20 billion and $23 billion this year on AI infrastructure and data center capacity. This massive investment aims to keep up with rapidly growing demand from major clients, including Microsoft.
Despite the positive revenue report in its first public quarter since listing on Nasdaq in March, CoreWeave’s shares dropped 5%. The stock initially jumped 11% after the earnings beat but fell as investors digested the company’s heavy spending plans.
CEO Mike Intrator explained that CoreWeave’s way of managing debt and capital spending is unique and may take time for the market to fully understand. He emphasized that the company fully pays back its infrastructure investments while maintaining strong profits.
For the second quarter, CoreWeave expects to spend $3 billion to $3.5 billion on capital expenditures, far exceeding its revenue forecast of about $1.06 billion to $1.1 billion.
The demand for data centers and powerful servers has surged as companies race to develop more advanced generative AI technologies. Amid ongoing U.S.-China trade tensions, Intrator said CoreWeave is diversifying its supply chains to reduce the risk of tariffs and protect profit margins.
“Our clients expect significant investment from us, and we want to ensure we maintain the margins needed to run our business,” Intrator said.
Although CoreWeave holds a strong market position, its business is capital intensive. It requires large upfront investments in advanced processors and systems.
D.A. Davidson analyst Gil Luria noted that while CoreWeave’s revenue from Microsoft is likely secure for the next three years, the company mainly provides overflow capacity for Microsoft. This means Microsoft may not need as much of CoreWeave’s capacity in the future.
CoreWeave’s revenue backlog was $25.9 billion as of March 31. A large part of this comes from its five-year agreement with OpenAI, valued at $11.2 billion. Under this deal, signed in March, CoreWeave will supply AI infrastructure to OpenAI, which in turn will receive a stake in CoreWeave.
The company expects annual revenue between $4.9 billion and $5.1 billion, surpassing analysts’ estimates of $4.61 billion. In the first quarter, CoreWeave reported revenue of $981.6 million, beating the expected $852.9 million.
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