Nvidia's favored child CoreWeave has pulled back nearly 40%. Is it worth buying the dip?
AI cloud computing provider CoreWeave has experienced significant volatility in its stock price since its IPO, with a peak increase of over 300%. It has become one of the hottest IPOs of 2025.
However, as the company's stock price rapidly climbed, the market has also grown increasingly wary of CoreWeave's high valuation and debt risks. Factors such as CoreWeave's debt risk, rapid GPU depreciation, and potential integration challenges with corescientific could pose catastrophic risks to the company.
Now that CoreWeave has pulled back nearly 40%, is it a good investment opportunity? What are the specifics of its opportunities and risks?
From a Small Crypto Mining Firm to an AI Computing Giant
CoreWeave started as a small cryptocurrency mining operation. In 2016, its three founders purchased a single GPU and mined their first block on the Ethereum network.
During the 2017 crypto boom, they engaged in speculative hardware purchases and established their first data center in New Jersey. In the following years, as cryptocurrency prices plummeted, they seized the opportunity to acquire more hardware and diversified into building a specialized cloud infrastructure with a large GPU inventory. In December 2019, the company rebranded as CoreWeave, marking its transition from crypto mining to broader cloud computing services.
The 2022 AI wave created global demand for rapid model development, making GPUs one of the world's most valuable assets. CoreWeave had already stockpiled a significant number of NVIDIA chips and secured an exclusive partnership with NVIDIA, which included equity investment, priority access to advanced GPUs, and a platform optimized for AI and HPC workloads using NVIDIA GPUs and InfiniBand networking. With NVIDIA's cutting-edge ecosystem, CoreWeave leads in AI and HPC performance, particularly excelling in GPU-intensive tasks. CoreWeave's AI workloads are 35x faster than traditional cloud services, with inference latency as low as milliseconds. The company also claims its costs are 80% lower than traditional cloud services.
This advanced, fast, and cost-effective infrastructure has attracted numerous AI companies to queue up for CoreWeave's cloud services. More importantly, CoreWeave's bare-metal servers and large-scale advanced computing clusters complement traditional cloud giants' offerings, as the latter focus on databases and SaaS solutions, while CoreWeave specializes in high-performance bare-metal computing.
This synergy explains why Microsoft became CoreWeave's largest customer, accounting for 62% of its revenue by the end of 2024. Beyond Microsoft, CoreWeave has secured other major contracts, most notably a $12 billion, five-year deal with OpenAI in March 2025. These mega-deals provide CoreWeave with stable revenue and fuel its aggressive expansion.
Rapid Growth at a Cost
CoreWeave's growth is phenomenal, with revenue and debt expansion both staggering.
Key metrics for CoreWeave:
Revenue has grown exponentially, from $16 million in 2022 to $1.9 billion in 2024. Analysts project revenue could exceed $20 billion by 2028, with remaining performance obligations (RPO) estimated at over $26 billion, highlighting CoreWeave's staggering growth potential.
However, net losses have also widened, driven by CoreWeave's ballooning debt. In 2023, revenue and debt both grew over 10x. Debt reached $8 billion by end-2024, rising to $11.75 billion in 2025, with projected interest expenses of $7.5 billion in 2025-2026.
This explosive growth is tied to CoreWeave's high-leverage business model. The company issues high-yield debt to fund aggressive NVIDIA GPU purchases, then uses these assets as collateral for further loans. It locks in long-term customer contracts to refinance debt at lower rates, reducing leverage over time.
CoreWeave's debt financing includes delayed-draw term loans (DDTL), high-yield bonds, and GPU-backed loans. Total debt stood at ~$8 billion by end-2024, with $2 billion in new high-yield bonds and $1.75 billion in senior notes added in 2025, plus $2.6 billion in operating lease liabilities, bringing total liabilities to ~$14.35 billion. This debt load exceeds CoreWeave's revenue scale, creating heavy financial burdens, with interest expenses being the primary profit drain.
If CoreWeave can significantly reduce debt costs, net income could surge. Conversely, rapid GPU depreciation leading to bad debt could force a major restructuring.
Two Key Risks
CoreWeave is a high-leverage AI computing play banking on sustained demand. Its future hinges on securing enough mega-deals to manage its debt.
Two critical risks stand out: First, customer stability—Microsoft, contributing 62% of revenue, is increasing its own capex, raising concerns about potential revenue loss. Any downturn could trigger debt issues given CoreWeave's leverage.
Second, reliance on NVIDIA. CoreWeave gets priority access to NVIDIA's latest GPUs, even ahead of major cloud providers. If NVIDIA shifts its partnership or expands its own cloud business, CoreWeave's edge could vanish.
Valuation
Analysts forecast 2025 revenue of ~$5 billion. At 10-25x P/S, CoreWeave's valuation would be $50-100 billion. Below $50 billion would be undervalued; above $100 billion, overvalued. At ~$55 billion currently, CoreWeave is nearing undervalued territory.
Long-term, if CoreWeave hits $21 billion revenue by 2028 with 10-20% net margins ($2.1-4.2 billion net income), a 25-35x P/E would imply a $52.5-148 billion valuation.
$NVIDIA(NVDA.US) $Coreweave(CRWV.US)
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