Is CoreWeave's Post-Lockup Selloff a Buying Opportunity or a Falling Knife?

The recent selloff in CoreWeave (NASDAQ: CRWV) following its lockup expiration has sparked heated debate among investors. Is this a chance to buy into a high-growth AI infrastructure leader at a discount, or a warning sign of unsustainable hypergrowth? To answer, we must dissect the company's fundamentals, liquidity risks, and the broader dynamics of the AI sector.

The Case for CoreWeave: AI Demand as a Tailwind

CoreWeave's Q2 2025 results underscore its dominance in the AI infrastructure race. Revenue surged 207% year-over-year to $1.21 billion, driven by a $4 billion expansion deal with OpenAI and a $11.9 billion contract. These partnerships position CoreWeave as a critical enabler for AI labs and enterprises, with its 470 MW of active power and 2.2 GW of contracted capacity ensuring it can meet surging demand. The acquisition of Weights & Biases for $1.4 billion further strengthens its platform, integrating tools for AI model monitoring and inference—a strategic move to capture more value in the AI stack.

The company's adjusted EBITDA margin of 62% (slightly down from 63% in 2024) highlights operational efficiency despite rising costs. With a $30.1 billion revenue backlog—comprising future commitments under customer contracts—CoreWeave's long-term visibility is robust. This backlog, combined with its first-mover advantage in deploying NVIDIA's Blackwell GB200 NVL72 systems, suggests it is well-positioned to capitalize on the AI arms race.

Liquidity Risks: Debt, Capital Expenditures, and Interest Burden

However, the selloff reflects legitimate concerns about liquidity. CoreWeave's cash reserves fell from $2.52 billion at the start of Q2 to $2.05 billion by June 30, 2025, due to $2.44 billion in capital expenditures and $251 million in operating cash outflows. To fund this expansion, the company issued $3.65 billion in debt, including 9.25% senior unsecured notes due 2030. This translates to an annual interest burden of $185 million—a significant drag on cash flow.

While the debt raise signals investor confidence, it also raises leverage concerns. CoreWeave's net loss of $290 million (improved from $323 million in 2024) and projected 2025 capital expenditures of $20–23 billion highlight the company's reliance on continuous financing. If AI demand slows or refinancing becomes harder, CoreWeave could face liquidity crunches.

Execution Risks: Can CoreWeave Scale Without Burning Out?

Hypergrowth tech plays often face execution risks, and CoreWeave is no exception. Its Kenilworth, NJ data center project—its first greenfield AI campus—requires flawless execution to deliver 250 MW by 2026. Delays or cost overruns could strain its balance sheet. Additionally, the company's reliance on a handful of clients (OpenAI, Goldman Sachs, etc.) introduces concentration risk. A loss of a major partner could disrupt revenue streams.

The AI infrastructure market is also becoming increasingly competitive. Amazon, Microsoft, and Google are pouring billions into their own AI clouds, while startups are innovating in niche areas. CoreWeave's ability to maintain its first-mover advantage will depend on its pricing strategy, technological edge, and customer retention.

Is This a Buying Opportunity?

The post-lockup selloff has priced CoreWeave's shares at a discount to its intrinsic value, but only for investors with a high-risk tolerance. The company's fundamentals—explosive revenue growth, leadership in AI infrastructure, and a $30.1 billion backlog—suggest long-term potential. However, the near-term risks are substantial:

1. Liquidity: The $185 million annual interest burden and $20–23 billion in capex require consistent access to capital.
2. Execution: Scaling infrastructure and maintaining margins in a competitive market is no small feat.
3. Valuation: CoreWeave's stock is volatile, and a falling knife could continue if earnings miss expectations.

For investors, the key is to balance optimism with caution. A position in CoreWeave should be a small, high-conviction bet in a diversified portfolio. Those who believe in the AI revolution and CoreWeave's ability to execute its vision may find the current selloff compelling. But for risk-averse investors, the falling knife remains sharp.

Conclusion

CoreWeave's post-lockup selloff is a classic case of “buy the company, sell the stock.” The underlying business is strong, but the path to profitability is fraught with liquidity and execution risks. If the company can manage its debt, scale its infrastructure efficiently, and maintain its leadership in AI, the rewards could be enormous. However, this is not a short-term trade—it requires patience and a stomach for volatility. For those willing to take the plunge, CoreWeave offers a rare glimpse into the future of AI, but only if the future aligns with its ambitious plans.