3 Risks Investors Should Know Before Buying CoreWeave Stock

Core Viewpoints - CoreWeave has emerged as a significant player in the AI infrastructure sector, leveraging strong connections with Nvidia and a growing client base that includes major enterprises like OpenAI and Microsoft [1] Group 1: Growth and Capital Intensity - CoreWeave's business model is heavily reliant on substantial capital investments to build AI-optimized cloud infrastructure, which includes deploying thousands of Nvidia GPUs and constructing data centers [4] - The company is currently unprofitable, with negative operating cash flow as it focuses on expanding capacity, operating under a "build now, profit later" strategy [5][6] - If demand growth slows or financing costs increase, the capital intensity could become a significant burden, potentially impacting profitability [6] Group 2: Customer Concentration Risks - A large portion of CoreWeave's revenue is concentrated among a few key clients, with the top two customers accounting for 77% of total sales projected for 2024 [7] - This dependency poses risks in a rapidly evolving industry, as any shift by these clients to in-house solutions or alternative providers could severely impact revenue visibility [8] Group 3: Competitive Landscape - The competitive environment in the AI infrastructure space is intensifying, with other players rapidly closing in on CoreWeave's market position [9]