By Jaspreet Singh
(Reuters) -CoreWeave shares fell more than 6% on Thursday after the Nvidia-backed artificial intelligence cloud firm forecast that its annual capital expenditure would be about four times higher than predicted revenue in 2025.
The projection, made in CoreWeave’s first earnings since going public in March, shows companies are continuing to plough billions of dollars into AI even as investor scrutiny has sharpened after the launch of DeepSeek’s low-cost AI models.
The company said it added a new hyperscaler and signed expansion agreements with its customers, including a recent $4 billion deal with a large AI enterprise.
“Investors were alarmed by the level of capital intensity for CoreWeave.” D.A. Davidson & Co analyst Gil Luria said.
“Signing more hyperscalers as customers is not really good news. Hyperscalers are direct competitors to CoreWeave and are only temporarily using CoreWeave for overflow capacity. They will likely go away once they have built out enough of their own data centers.”
CoreWeave, which leases computing capacity to technology companies and hyperscalers such as Microsoft, reported a more than five-fold increase in its revenue to $981.6 million for the first three months of the year.
The management was optimistic about the demand for its services on the post-earnings call, but brokerage MoffettNathanson said “the cost of preparing to meet this demand may spook investors” who are paying a high price for the stock.
Big Tech firm Meta raised its annual capital expenditure forecast in April, while Alphabet reaffirmed it and a Microsoft executive also re-emphasized the company’s AI spending plans.
As of last close, CoreWeave’s stock surged 69% from the offer price in its March IPO. At least seven brokerages have raised their price targets on the stock to between $50 and $80.
(Reporting by Jaspreet Singh in Bengaluru; Editing by Krishna Chandra Eluri)
