CoreWeave (NASDAQ:CRWV) stock has lost over half of its value since peaking at $187 per share last June amid doubts about its high valuation and concerns over artificial intelligence (AI) growth slowing. Investors worried about the sustainability of AI demand, with the company’s market cap dropping to under $45 billion today. Critics also pointed to the circular nature of deals with Nvidia (NASDAQ:NVDA | NVDA Price Prediction) and OpenAI, suggesting they artificially propped up revenues.
However, CEO Michael Intrator appeared on the Big Technology podcast and pushed back against these views. He called claims of circular financing with Nvidia “ridiculous” and noted Nvidia’s stake is too small to support CoreWeave’s operations. The stock surged more than 12% yesterday, closing at $89.93 per share.
With management’s full-throated defense of its business and the stock’s rebound, is CoreWeave now a buy again?.
Do Criticisms Hold Water?
Critics have raised valid points about CoreWeave’s arrangements with Nvidia. Nvidia invested roughly $300 million in CoreWeave across two rounds before its March 2025 IPO, acquiring a 7% stake with 24.2 million shares. Beyond that, a $6.3 billion deal commits Nvidia to purchase any unsold cloud computing capacity from CoreWeave through April 2032.
Such agreements create a financial loop: Nvidia buys capacity, CoreWeave builds data centers using Nvidia chips, and this supports deals with clients like OpenAI. Analysts argue this interdependence risks inflating valuations without reflecting true end-user demand. For instance, CoreWeave’s high cash burn rate — estimated at $19 billion — raises sustainability questions if AI growth stalls.
Short-seller Jim Chanos highlighted that the useful life of Nvidia GPUs are overestimated, warning of faster depreciation as newer chips like Blackwell and Rubin emerge. This could hurt profitability, with CoreWeave reporting widened net losses of $863 million in 2024 despite revenue tripling. In 2025, operating losses of $748 million over the first three quarters are wider than the year-ago period.
Reliance on major clients such as Microsoft (NASDAQ:MSFT) and OpenAI adds risk if demand cools. Broader industry concerns include potential capacity gluts, heavy debt financing, and overinvestment in AI infrastructure. A Kerrisdale Capital report called CoreWeave’s valuation inflated due to these factors, viewing the Nvidia deal as a lifeline rather than organic growth. Lack of pricing transparency in such pacts could also invite regulatory scrutiny.
Defending the Business Model
Despite these issues, there are solid reasons for CoreWeave’s arrangements. The Nvidia capacity commitment ensures steady revenue amid surging AI demand, countering risks of idle assets. CoreWeave’s specialized GPU cloud platform benefits from a $55 billion revenue backlog in Q3 — double the previous year, while deals like the $11.9 billion pact with OpenAI and ties to Microsoft underscore strong partnerships. Analysts also note that flexible depreciation models align with actual usage, allowing recontracting of older GPUs for inference tasks.
Intrator emphasized that Nvidia’s $300 million investment is “de minimis” compared to CoreWeave’s $25 billion in total capital raised and $45 billion valuation. He attributed the relationship to a market imbalance where compute demand far exceeds supply. Supporters see these arrangements as strategic to secure AI dominance, with the sector projected to reach multi-trillion-dollar scale by 2030.
Goldman Sachs initiated coverage with a Neutral rating and $86 price target, praising CoreWeave’s architecture as having an edge over competitors. Moody’s report forecasts $3 trillion in data-center investments over five years, positioning CoreWeave among the key players. Moreover, plans to integrate Nvidia’s Rubin technology in 2026 further bolster its role in agentic AI.
Key Takeaways
Strong AI demand supports CoreWeave’s recovery potential, with triple-digit growth and a backlog signaling sustained interest. The long-term AI outlook remains positive, as infrastructure needs expand. At current prices, trading at less than 8 times sales after the stock’s sharp decline, the stock appears undervalued relative to its peaks.
Analysts highlight CoreWeave’s revenue growth and customer ties as positive forces, though execution risks and debt remain a threat and the stock’s recovery depends on proving it can operate profitably. While skepticism is warranted given the sector’s recent volatility and concerns about circular deals, the significantly reduced stock price offers an enticing entry point into a promising growth narrative.
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