CoreWeave beats revenue estimates and shares rebound on chip-backed debt plan

Results and forecast

CoreWeave reported third-quarter results on Tuesday, 10 November, and the figures came in above expectations. Revenue was $3.66bn, against an analyst average of $3.55bn according to N-tv, while the Financial Times put growth at 168% year on year to $3.7bn, ahead of the company's own guidance of $3.45bn to $3.6bn. The company raised its full-year revenue forecast to $13.0bn to $13.3bn, from $12.4bn to $13.2bn previously. Its revenue backlog reached $132.5bn at the end of September, up from $104bn at the end of June. CoreWeave also said it expects to be profitable on an adjusted basis in the first half of 2028.

End of June104

End of September132.5

End of June

104 $bn

End of September

132.5 $bn

Data from the article text

Funding and debt

CoreWeave is leaning more on asset-backed debt and customer prepayments to fund its expansion. It plans a chip-backed loan worth several billion dollars to buy Nvidia chips and other computing equipment for a contract with an unnamed investment-grade customer. The loan is expected to carry an interest cost of about 7% to 7.5%, less than half the yield on its unsecured debt, and chip-backed loans have covered 70% to 100% of equipment cost depending on the customer. The company expects about $9bn of customer prepayments and deposits over the next three months and says it would seek more. Total debt stood at $46.9bn at the end of September according to RTE, while the Financial Times reported debt and lease liabilities of $66.2bn, up from $51.6bn at the end of June.

End of June51.6

End of September66.2

End of June

51.6 $bn

End of September

66.2 $bn

Data from the article text

Intrator told analysts on Tuesday, 10 November, that the company would stay out of the unsecured market for now.

“Looking ahead, we will not use the unsecured debt market to fund our business at current yields. Nor do we need to.”

Quarterly capital spending rose to $14.5bn from $9.4bn in the prior quarter, which CoreWeave said is needed to bring capacity online. The company said it is largely sold out through the next year, with about ten times as much demand as available capacity. It held $4.1bn of cash and a further $2.3bn of restricted cash at the end of the quarter, and it expects to raise less than $5bn of new capital at parent level through 2027.

Prior quarter9.4

Quarter to September14.5

Prior quarter

9.4 $bn

Quarter to September

14.5 $bn

Data from the article text

Market reaction

CoreWeave shares had fallen more than 40% over the month before the results, after the company became the focal point of AI bubble fears. In extended trading they rose between 5% and more than 7%, with reports giving different figures, and the Financial Times recorded a 10.5% gain in pre-market trade. Nasdaq 100 futures rose 1.9% by 6:27 a.m. in New York according to Bloomberg, and 1.6% in the European morning according to the FT, partly recouping a 4.9% drop the index suffered the previous week. S&P 500 futures added between 0.7% and 0.9% depending on the time of measurement. Nvidia shares fell 5.5% on Tuesday after its chief executive admitted an affair with a woman the US believes is a Chinese spy, and were up 5% in pre-market trading.

Jefferies' Mohit Kumar tied the Democrats' sweeping midterm victory to the AI trade and said:

“We retain our bullish view on risky assets. Our view remains that the blue sweep does not destroy the AI trade.”

Anthropic began a roadshow for its share sale at a lower target valuation than earlier estimates, according to RTE. The Financial Times reported on 11 November that Anthropic's bankers were weighing plans to lift the company's IPO valuation to $1.5tn or more.

Open questions

The company, valued at $27bn according to cited data, has never posted a profit and had debt above $50bn in June. Some bond investors expect a default, and CoreWeave is seen as an early warning indicator for hyperscalers such as Amazon and Microsoft. Pictet's Arun Sai said investors are being whipsawed between a generational buying opportunity into AI and a classic value trap. CoreWeave told investors it does not see material risks to its data-centre buildout from a shift in regulation after the Democrats' midterm win.