NASDAQ:CRWV Surges on 207% Revenue Growth but Faces Debt and Lock-Up Pressures
NASDAQ:CRWV has endured extreme volatility in 2025, dropping nearly 50% from IPO highs before stabilizing near $92–95. The pullback was triggered less by deteriorating fundamentals and more by supply pressures from early insider selling and the September lock-up expiry. Despite that, fundamentals remain intact with Q2 revenue of $1.213 billion, a 207% year-over-year increase, and its first ever billion-dollar quarter. Crucially, 98% of revenue came from long-term contracts, and its backlog has surged to $30.1 billion, up 86% YoY, driven by expansions with existing hyperscaler and AI clients.
Explosive Growth Driven by Power Capacity, Not Just GPUs
CoreWeave ended Q2 with 470 megawatts of active power and 2.2 gigawatts under contract, with ambitions to almost double active capacity to 900 megawatts by year-end. This expansion is back-loaded, creating a mismatch between lease expenses and revenue recognition, suppressing GAAP margins. The demand base is broadening beyond AI labs into financial services, healthcare, and media. A key differentiator is its ability to capture inference demand, re-leasing older H100 and A100 GPUs to extend asset life and generate smoother revenue streams.
Strategic Acquisitions Strengthen Long-Term Moat
The acquisition of Weights & Biases brought observability tools into CoreWeave’s Mission Control, integrating workflow visibility across 1,600 enterprise clients. Adding OpenPipe positions the company in reinforcement learning, essential for scaling agent-based AI applications. On the infrastructure side, the purchase of Core Scientific secured 1.3 gigawatts of gross power capacity and eliminated over $10 billion in future lease exposures. Management projects $500 million in annual synergies by 2027, a number investors are scrutinizing but which underscores the strategic value of vertical integration.
Valuation Compression Narrows the Premium Gap
At IPO, NASDAQ:CRWV traded above 35x forward sales, rivaling high-growth SaaS names. Today, the multiple has compressed to around 12x forward EV/sales, still elevated against cloud peers averaging 3–5x, but justified by backlog visibility and 60%+ adjusted EBITDA margins. Consensus revenue forecasts of $5.25 billion in 2025, $11.99 billion in 2026, and $17.22 billion in 2027 set the stage for potential long-term appreciation. At a 6x multiple, 2027 revenues would imply a valuation near $103 billion, more than doubling the current $46 billion market cap.
Balance Sheet Strain From Heavy Leverage
The balance sheet highlights the primary risk. CoreWeave carries $11 billion in debt against only $1.1 billion in cash, with effective interest rates reaching 15%. Interest expenses totaled $530 million in the first half of 2025, suggesting full-year costs of nearly $1 billion, about 20% of expected revenue. IPO proceeds of $1.4 billion provided temporary relief, but the aggressive $20–23 billion capex program will require refinancing or new equity issuance. Until capital costs are reduced, profitability will remain under pressure.
