CoreWeave Stock Tumbles: Can This AI Powerhouse Turn the Tide?

CoreWeave (NASDAQ: CRWV) has seen its stock plummet more than 60% from its June 2025 peak, sparking fears of an AI infrastructure bubble. The company, which provides AI-focused cloud computing services, is now facing growing scrutiny over its aggressive spending and debt-heavy strategy. While its revenue backlog has swelled to $55.6 billion, CoreWeave's path to profitability remains uncertain. According to financial reports

A High-Stakes Play in AI Infrastructure

CoreWeave operates by leasing NVIDIA GPUs to major players like OpenAI, Microsoft, and Meta, while relying heavily on rented data centers and high-interest debt to scale its infrastructure. The company's capital expenditures (capex) have been staggering: over $8 billion over the past 12 months and $12–$14 billion expected for 2025. This aggressive expansion has helped drive revenue growth, with Q3 2025 earnings reporting $1.36 billion in revenue—up 134% year-over-year—but at a cost. Operating income fell 56% to $51.9 million, while interest expense alone hit $311 million for the quarter.

The company has also slashed its 2025 guidance due to delays in data center construction, with weather-related issues in North Texas pushing back the completion of a major facility. These setbacks have left investors questioning whether CoreWeave's rapid expansion is sustainable or if it's building a house of cards in the name of growth.

A Deepening Funding Challenge

One of the most pressing concerns is the company's operating margins, which have dropped to around 4%. This is a red flag for any investor, especially given CoreWeave's over $14.2 billion in principal debt as of September 30, 2025. With interest rates still elevated and the AI landscape rapidly evolving, the company may struggle to justify its current valuation.

Legendary short-seller Jim Chanos has also raised concerns, warning that AI hardware depreciation schedules are being stretched beyond reality. He argues that NVIDIA's rapid innovation cycle—newer, faster GPUs being released every three to four years—makes it harder for companies like CoreWeave to sustain profitability. This kind of insight from a seasoned bear adds fuel to the fire of skepticism.

What This Means for Investors

CoreWeave's stock has not only fallen but has also failed to reclaim its 50-day moving average since November 2025, signaling a weak near-term outlook. Mizuho analysts have cut their price target from $120 to $92, keeping a 'Neutral' rating. The market's loss of confidence is evident in the company's over $33 billion drop in valuation over just six weeks.

For investors, the key question is whether CoreWeave can execute on its long-term promise. The company has extended several customer contracts without a drop in value and has a backlog that suggests strong future demand. However, these contracts alone won't offset the debt burden or restore investor trust unless the company begins to generate consistent profits—something it won't achieve until at least 2027. As market analysis shows, the path to profitability remains uncertain.

A Long Road Ahead

Despite these challenges, CoreWeave's core business is still in high demand. The AI industry is booming, and demand for GPU-powered computing is only expected to grow. The question isn't whether CoreWeave has potential—it clearly does—but whether the company can manage its finances responsibly while scaling.

To that end, CoreWeave's recent $2 billion convertible notes offering suggests it is still raising capital to fund its operations. While this provides short-term liquidity, it also adds more debt and further dilutes existing shareholders. For now, the company is betting that it can maintain its revenue momentum long enough to reach profitability. But with operating margins barely covering interest costs and guidance repeatedly cut, time is running out.

At the end of the day, CoreWeave's stock has become a test of investor patience in the AI sector. Whether it turns around will depend on its ability to execute efficiently, manage its debt, and deliver on its long-term vision. For now, the market is watching closely—and waiting.