CoreWeave's AI Backlog Boom Can't Offset Data Center Delays and Debt Surge

CoreWeave (CRWV) stock plunged nearly 30% in early November after the AI cloud provider cut its 2025 revenue forecast despite a blockbuster third-quarter performance. The stock, which trades at a steep discount to its 52-week high, has drawn mixed reactions from analysts, with some viewing the selloff as a buying opportunity and others warning of structural risks in the company's capital-intensive business model according to Charlie Munger.

The firm reported Q3 revenue of $1.365 billion, surpassing estimates by $65 million and marking a 134% year-over-year increase. Adjusted EBITDA reached $838 million, while the revenue backlog surged to $55.6 billion, an 85% jump from the prior quarter. Despite these gains, management revised its 2025 revenue guidance downward to $5.05 billion–$5.15 billion from $5.35 billion, citing delays in construction at a major data center partner. The postponement, which shifted revenue recognition to future periods, has raised concerns about execution risks.

The stock's sharp decline followed a J.P. Morgan downgrade from Overweight to Neutral, with analyst Mark R. Murphy citing supply chain bottlenecks and rising debt servicing costs. CoreWeave's interest expenses tripled to $311 million in Q3 compared to $104 million in 2024, while operating margins contracted to 16% from 21% a year earlier. The company has also seen several high-profile investors scale back their stakes, including Coatue Management, which reduced its position by 62% in Q3 and Soros Fund Management, which fully exited its holding.

Despite the turmoil, the firm's long-term prospects remain buoyed by a robust backlog of multiyear contracts. Meta Platforms and OpenAI have committed $14.2 billion and $22.4 billion, respectively, while Nvidia guaranteed $6.3 billion in capacity through 2032 according to analysts. Analysts like HC Wainwright's Kevin Dede argue the selloff is an overreaction, emphasizing that the delays are temporary and that demand for AI infrastructure remains "consistently high". The company's data center expansion, including 32 facilities with 2.9 gigawatts of contracted power, is expected to drive future growth.

However, critics highlight the company's financial strain. CoreWeave burned through $4.75 billion in free cash flow in the first nine months of 2025, funded largely by $4.5 billion in debt issuance. With a market cap of $39 billion and a forward price-to-sales ratio of 7.8X, the stock trades at a premium to peers despite ongoing losses. Analysts remain divided: 13 of 26 maintain a Buy rating, while 12 hold a Hold or Sell.

CoreWeave's management insists the issues are "isolated and temporary," with delays expected to ease by early 2026 according to management. Yet, as one Seeking Alpha contributor noted, the company's reliance on rapid, high-cost capital expenditures to stay competitive in the AI arms race raises questions about sustainability. For now, investors are left weighing the promise of AI-driven growth against the risks of a business model that demands relentless reinvestment.