Is CoreWeave Stock a Buy, Sell, or Hold After Earnings?

Core View - CoreWeave experienced a significant drop in stock price after issuing Q1 2026 guidance that fell short of analysts' expectations, leading to an 18% decline in shares [1] Financial Performance - In Q4, CoreWeave reported revenue of $1.57 billion, representing a 110% year-over-year increase and slightly exceeding the consensus estimate of $1.55 billion [5] - The company's contracted revenue backlog grew to $66.8 billion, an increase of over $11 billion from the previous quarter and more than four times higher than a year ago [5] - Active power capacity reached 850 megawatts across 43 data centers, surpassing the analyst projection of approximately 827 megawatts [5] - Adjusted EBITDA was reported at $898 million, just below the consensus estimate of $929 million [5] - The adjusted loss per share was $0.56, worse than the expected loss of $0.49 per share [5] Q1 Guidance and Market Reaction - CoreWeave guided for Q1 revenue between $1.9 billion and $2 billion, significantly missing the estimates of $2.29 billion [6] - The company indicated that Q1 would represent the lowest point for margins this year, with adjusted operating income expected to be between $0 and $40 million [6] - Margins are projected to improve throughout the year, returning to low-double-digits by Q4 [6] Capacity Expansion and Cost Implications - CoreWeave is aggressively expanding its capacity, having added 260 megawatts of active power in Q4, which is about one-third of its total installed base at the beginning of the quarter [7] - This rapid expansion results in increased data-center costs and depreciation impacting the income statement before the associated revenue materializes [7] - The CEO highlighted that current margins reflect the costs associated with building future revenues [7]