Neocloud company CoreWeave(NASDAQ: CRWV) released its fourth-quarter 2025 results on Feb. 26, and investors weren’t impressed by the company’s numbers and outlook. The stock fell sharply following the report and is now trading 60% below the 52-week high it achieved in June last year.
CoreWeave stock has jumped impressively since its initial public offering (IPO) in March last year. However, the stock has remained under pressure in recent months over concerns about its huge capital expenditure and worries about an artificial intelligence (AI) bubble. As such, it was easy to see why investors pressed the panic button after the company reported a bigger-than-expected loss and delivered lower-than-expected revenue guidance for the current quarter.
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Savvy investors, however, may be wondering if it is a good time to buy this AI stock. Let’s take a closer look at its results and guidance and see whether the pullback is indeed a buying opportunity.
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CoreWeave’s 2025 revenue jumped by 168% year over year to $5.1 billion. However, its capital expenditures were much higher at $14.9 billion last year. CoreWeave spent $8.2 billion in capital expenditures in Q4 alone, a jump of 242% from the year-ago period. As a result, its adjusted net loss surged by almost tenfold to $606 million in 2025.
However, CoreWeave’s aggressive capital spending is a necessity. That’s because the demand for AI-focused cloud computing capacity is rising at an incredible pace, and there isn’t enough supply available in the market to satisfy the demand. According to Goldman Sachs, data center power capacity in the U.S. could fall short of demand by 9 gigawatts (GW) in 2026, followed by a bigger gap of 10 GW in each of the next two years.
CoreWeave has built a terrific customer base that includes major hyperscalers and AI companies, who are spending massively on AI data centers. It ended 2025 with a revenue backlog of $67 billion, up over fourfold from the 2024-end backlog of $15.1 billion. The sharp jump in the backlog was driven by new customer contracts and the expansion of existing contracts.
It needs to fulfill 42%, or $28 billion, of its backlog in the next couple of years. So, CoreWeave needs to aggressively add more data center capacity, which explains the sharp increase in its capex. CEO Michael Intrator explained the same in the latest earnings call: “We were able to deploy our data center and server infrastructure faster than expected, while bringing online more capacity this quarter than any in our history. This drove the corresponding increase in our cost of revenue and technology and infrastructure spend.”
CoreWeave plans to spend $30 billion to $35 billion in capex in 2026. Again, that’s going to be significantly higher than the $12 billion to $13 billion in revenue that it anticipates this year. However, the company is confident that its investments will eventually lead to stronger revenue growth.
CoreWeave believes that it will exit 2026 with an annualized run rate revenue (ARR) of $17 billion to $19 billion. The company calculates this metric by multiplying the revenue in the last month of the year by 12. Even better, CoreWeave is confident it will exit 2027 with more than $30 billion in ARR, meaning it will end next year with at least $2.5 billion in monthly revenue.
So don’t be surprised to see CoreWeave’s revenue in 2028 jump by sixfold from last year’s levels. What’s more, the company estimates that its long-term adjusted operating margin could land between 25% and 30%, well above last year’s reading of 13%. At the same time, CoreWeave is focused on lowering its average cost of capital.
It reduced its weighted average interest rate by 300 basis points last quarter, which will help it save $700 million in annualized interest. CoreWeave expects to further reduce its capital costs by enabling “broader industry participation” in financing facilities by partnering with more investment providers and financial institutions.
Analysts are therefore anticipating CoreWeave will become profitable.
CoreWeave isn’t profitable yet, which explains why it doesn’t have a price-to-earnings ratio. However, the sales multiple of 6.6 is lower than the U.S. technology sector’s average sales multiple of 8.3.
CoreWeave stock deserves to trade at a higher multiple considering the rapid revenue growth it is delivering. However, investors are more concerned with the bottom-line performance. The good part is that CoreWeave is likely to deliver on that front as well, as evidenced by the chart above. Assuming it indeed delivers $2.86 per share in earnings in 2028 and trades at 32 times earnings at that time (in line with the Nasdaq-100 index’s earnings multiple), its stock could jump to $91.
That points to a potential 23% jump from current levels. However, don’t be surprised if it delivers bigger gains given its focus on quickly converting its massive backlog into revenue.
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Harsh Chauhan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Goldman Sachs Group. The Motley Fool has a disclosure policy.
