CoreWeave's 2026 CapEx Spend to Double: High Risk or High Reward?

Core Company Insights - CoreWeave, Inc. (CRWV) is experiencing rapid expansion and significantly increasing capital expenditures to meet AI demand, with 2026 capex expected to exceed double that of 2025 [1][10] - For 2025, CoreWeave's capex is estimated to be between $12 billion and $14 billion, a reduction from earlier projections of $20 billion to $23 billion, with a large portion of this spending being recognized in early 2026 due to delays [2][10] - The company has a substantial revenue backlog of $55.6 billion and 2.9 gigawatts of contracted power capacity, with over 1 gigawatt expected to come online in the next 12-24 months, positioning CoreWeave to capture future demand [3][10] Financial Performance and Challenges - CoreWeave's aggressive scaling may pressure near-term adjusted operating margins due to the timing of data center costs versus revenue recognition [4] - Interest expenses have surged to $311 million from $104 million a year ago, with expectations for 2025 interest expenses between $1.21 billion and $1.25 billion, which could impact adjusted net income and free cash flow generation [5] - The company's ability to manage these financial strains while competing against rivals like Nebius, Microsoft, and Amazon will be crucial for its growth trajectory [6] Industry Comparisons - Amazon is projected to have a cash capex of $125 billion for 2025, with significant investments in AWS growth and technology infrastructure [7][8] - Nebius has increased its 2025 capex plan to $5 billion from $2 billion, focusing on securing critical resources for data center and GPU deployment [9][11] Market Performance - CoreWeave's shares have increased by 20.9% over the past month, contrasting with a 1.1% decline in the Internet Software industry [12] - The company's shares are trading at a Price/Book ratio of 8.72X, significantly higher than the industry average of 5.8X [14] - The Zacks Consensus Estimate for CoreWeave's earnings for 2025 has been revised upwards over the past 60 days, indicating positive market sentiment [15]