CoreWeave's Volatile Path: Buyout Uncertainty and AI Infrastructure Growth

The AI infrastructure sector is a high-stakes arena where innovation and volatility collide. CoreWeave, a rising star in this space, finds itself at a crossroads as it navigates the turbulence of its $9 billion all-stock buyout of Core Scientific and the explosive demand from tech giants like Microsoft. For investors, this presents a compelling yet precarious opportunity: a bet on the future of AI computing, but one that requires a careful balancing act between strategic growth and regulatory risk.

The Buyout: A High-Stakes Gamble

CoreWeave's proposed acquisition of Core Scientific, announced in July 2025, is a bold move to consolidate power in the AI infrastructure race. The deal, valued at $9 billion, would grant CoreWeave access to Core Scientific's 1.3 gigawatt data center footprint and slash $10 billion in cumulative lease costs. However, the path to closure is fraught with uncertainty. Core Scientific's largest shareholder, Two Seas Capital, has vocally opposed the deal, arguing it “materially undervalues” the company and exposes shareholders to “substantial economic risk.” With CoreWeave's stock down over 30% since the announcement, the fixed exchange ratio of 0.1235 shares per Core Scientific share leaves investors vulnerable to further declines.

Regulatory hurdles add another layer of complexity. While the SEC has received the necessary filings, including a Form S-4, the approval process remains opaque. Shareholder sentiment is critical here: without a revised deal structure—including a price collar to protect Core Scientific shareholders—the merger could face a hostile vote later this year. For now, the transaction is a ticking clock, with a Q4 2025 closing date contingent on approvals.

Microsoft's Role: A Lifeline or a Liability?

Amid the buyout drama, CoreWeave's partnership with Microsoft remains a cornerstone of its growth narrative. Microsoft accounted for 62% of CoreWeave's 2024 revenue and has committed $10 billion in spending by 2030. This partnership isn't just about cash—it's about positioning CoreWeave as a critical player in the AI arms race. Microsoft's Azure AI division relies heavily on CoreWeave's GPU cloud to power models like OpenAI's ChatGPT, and the two companies have five active contracts, including a $11.9 billion infrastructure deal with OpenAI.

Yet, recent reports suggest Microsoft has scaled back some commitments due to delivery delays, though CoreWeave denies any contract cancellations. The unexercised $12 billion data center option was swiftly picked up by OpenAI, a move that underscores CoreWeave's flexibility but also highlights its reliance on a narrow client base. With 77% of 2024 revenue coming from just two customers, any hiccup in these relationships could ripple through CoreWeave's financials.

The AI Infrastructure Gold Rush

Despite the risks, the fundamentals are undeniably bullish. AI demand is surging, and CoreWeave is betting big on its ability to meet it. The company has allocated $23 billion in 2025 capital expenditures to expand its GPU capacity and data center footprint, a figure that dwards its $1.06–$1.10 billion revenue projections. This aggressive spending is justified by a $25.9 billion revenue backlog, including the OpenAI contract, and a $15.1 billion “remaining performance obligations” pipeline.

However, the math is daunting. CoreWeave's $54.7 billion market cap trades at 19.6x forward sales, a premium that demands execution. The company's net loss of $314.6 million in Q1 2025—driven by $177 million in stock-based compensation—raises questions about profitability. Yet, in a sector where scale trumps margins, CoreWeave's ability to secure long-term contracts with industry leaders like Microsoft and OpenAI could justify the valuation.

Strategic Investment Considerations

For investors, CoreWeave represents a high-conviction play on the AI infrastructure boom. The buyout of Core Scientific, if approved, could unlock significant synergies by reducing costs and expanding power capacity. However, the shareholder opposition and regulatory risks mean this deal is far from a sure thing. Meanwhile, the Microsoft partnership provides a strong tailwind, but the company's heavy reliance on a few clients introduces concentration risk.

The key question is whether CoreWeave can execute its vision without burning through cash. Its $8 billion in debt and $20–$23 billion in planned CAPEX require disciplined capital allocation. If the company can maintain its growth trajectory while improving margins, the rewards could be substantial. But if the buyout collapses or client relationships sour, the stock could face a sharp correction.

Final Verdict: A Volatile But Rewarding Bet

CoreWeave's journey is a textbook example of the risks and rewards inherent in the AI infrastructure sector. The buyout of Core Scientific is a high-stakes gamble that could either supercharge growth or backfire spectacularly. Meanwhile, the Microsoft partnership offers a lifeline, but it's not a guarantee of long-term success.

For investors with a high risk tolerance and a long-term horizon, CoreWeave's stock is worth a close look. The company is positioned to benefit from the AI revolution, but patience and a clear-eyed assessment of the risks are essential. If the buyout closes and CoreWeave can navigate its client dependencies, the upside could be enormous. However, those who can't stomach the volatility should steer clear—this is a rollercoaster, not a steady climb.

In the end, CoreWeave's story is one of ambition and uncertainty. For those willing to ride the wave, the potential for outsized returns is there—but only if you're prepared to weather the storm.