CoreWeave Stock Soars on $14 Billion Meta Deal -- Wall Street Says the Nvidia-Backed AI Stock Is Still a Buy

Core Insights - CoreWeave signed a significant deal with Meta Platforms worth $14.2 billion for computing power through 2031, with an option to extend through 2032 [1] - The partnership indicates Meta's satisfaction with CoreWeave's services, having been a customer since December 2023 [2] - Following the announcement, CoreWeave shares rose nearly 12%, with analysts projecting a median target price of $157 per share, suggesting a 16% upside from the current price of $136 [3] Company Positioning - CoreWeave is recognized as a technology leader in AI cloud services, classified as a neocloud provider, specifically designed for AI workloads [4] - Research firm SemiAnalysis ranked CoreWeave above competitors and traditional cloud providers due to its technical expertise and performance [5] - The company is the only neocloud capable of operating clusters of over 10,000 GPUs and has set performance records in MLPerf benchmarks [6] Financial Performance - CoreWeave reported a 207% increase in revenue to $1.2 billion and a 135% rise in non-GAAP operating income to $200 million in Q2 [7] - The revenue backlog increased by 86% due to expanded deals with OpenAI and another hyperscale company [7] - Capital expenditures are projected to rise significantly, with estimates between $20 billion and $23 billion in 2025, up from $8.7 billion in 2024 and $2.9 billion in 2023 [9] Debt and Investment Considerations - CoreWeave has taken on substantial debt, with interest expenses consuming over 20% of revenue in Q2 [8] - The company only incurs debt when customer demand necessitates additional capacity, and when contracts cover the debt costs [10] - Nvidia has a strong investment in CoreWeave, with 91% of its $4.3 billion portfolio allocated to the company, and Wall Street anticipates a 91% annual revenue growth through 2027 [11]