CoreWeave Slides Post Q3 Earnings: Is It Time to Buy the Stock?

Core Insights - CoreWeave, Inc. (CRWV) experienced a significant decline in share price following its Q3 2025 results, with a drop of 16.3% in the last session and a total decline of 37.6% over the past month, underperforming the Zacks Internet-Software Market's loss of 6.8% [1][2] Financial Performance - CRWV reported record revenues of $1.4 billion in Q3, exceeding the Zacks Consensus Estimate by 6.8% and reflecting a year-over-year increase of 134% driven by high demand for AI compute capacity [3][7] - The revenue backlog reached $55.6 billion, nearly doubling quarter over quarter, indicating strong future revenue visibility [3][7] - Total operating expenses rose to $1.3 billion from $466.8 million in the previous year, with operating income decreasing to $51.9 million from $117.1 million year-over-year [4] Guidance and Capital Expenditure - The company lowered its revenue guidance for full-year 2025 to between $5.05 billion and $5.15 billion, down from the previous estimate of $5.15 billion to $5.35 billion [8] - Adjusted operating income is now forecasted to be between $690 million and $720 million, reduced from an earlier expectation of $800 million to $830 million [9] - Capital expenditures (capex) are estimated to be between $12 billion and $14 billion, significantly lower than the previous projection of $20 billion to $23 billion [10] Competitive Landscape and Challenges - CoreWeave faces intense competition in the AI cloud infrastructure market from major players like Amazon and Microsoft, as well as emerging companies like Nebius [5][10] - The company has raised $14 billion in debt and equity year-to-date, with interest expenses increasing to $311 million compared to $104 million a year ago [11] Growth Potential and Strategic Initiatives - CoreWeave's GPU-based cloud services are positioned well within the AI infrastructure boom, supported by a substantial backlog and diversified customer base [12][17] - The company is expanding its infrastructure with eight new data centers in the U.S. and further expansions planned in Europe [13][14] - Strategic partnerships with NVIDIA, OpenAI, and Meta Platforms enhance its market position and validate its infrastructure capabilities [16][17] Valuation and Investment Outlook - Despite concerns over high capital expenditures and rising interest costs, CoreWeave's long-term growth potential remains strong, supported by its solid backlog and strategic partnerships [22][23] - The current dip in CRWV stock is viewed as an attractive buying opportunity, with the company holding a Zacks Rank 2 (Buy) [23]