CoreWeave Stock Has Lost More Than a Third of Its Value in 3 Months. Time to Buy?

Core Viewpoint - CoreWeave's stock decline is attributed to a stretched valuation despite strong revenue growth and narrowing net losses [1][3][4] Financial Performance - CoreWeave reported third-quarter revenue of $1.36 billion, a 133% increase from $584 million year-over-year, and a net loss reduced from approximately $340 million to $110 million [3] - The company has a revenue backlog of $55.6 billion, supported by multi-year commitments from major clients like Meta Platforms and an expanded partnership with OpenAI [3] Guidance and Market Reaction - Management revised its 2025 revenue guidance down to between $5.05 billion and $5.15 billion, lower than the previous estimate of up to $5.35 billion, due to delays from a third-party data-center provider [4] - The stock sell-off was primarily triggered by this lowered guidance rather than the quarterly performance itself [4] Valuation Concerns - Following the earnings report, CoreWeave's market capitalization is approximately $43 billion, with a price-to-sales ratio of 10, indicating a high valuation given the absence of GAAP profits [6] - The uncertainty surrounding the sustainability of hyperscalers' capital expenditures, as evidenced by Meta's recent spending plans, adds to the valuation dilemma [7][8] Industry Context - The significant spending by hyperscalers on AI infrastructure presents both opportunities for growth and risks of reduced spending in the future [8] - The cyclical nature of AI investments raises questions about the timing of the peak in the current investment cycle and its impact on CoreWeave's growth trajectory [9]