In its short time as a public company, cloud platform provider CoreWeave (CRWV 6.95%) has generated a considerable amount of excitement. Since the date of its initial public offering, shares have skyrocketed over 200%.
But investors don't pay too much mind to the past -- they want to know what's coming down the pike. To this end, they can expect big things from CoreWeave over the next year.
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Management expects massive revenue growth in 2025 -- and that's not all
Demand for data center infrastructure to support artificial intelligence (AI) computing is absolutely soaring. Without the necessary infrastructure in place, AI companies will be unable to meet the steep computing needs that AI requires, so companies are investing hefty sums on data centers. And CoreWeave is certainly benefiting. In 2023 and 2024, the company reported year-over-year revenue growth of 1,346% and 737%, respectively.
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Key Data Points
With respect to profitability, the company has also enjoyed success. Whereas CoreWeave reported adjusted operating income of negative $21.4 million in 2022, things improved in 2023, when the company reported adjusted operating income of $0.7 million, and then $355.8 million in 2024.
Looking ahead, the company is confident that revenue and profit growth will extend through 2025. In addition to forecasting 2025 sales of $4.9 billion to $5.1 billion, management projects adjusted operating income of $800 million to $830 million. If the company reports the midpoint of both of these metrics, it means that it will have achieved revenue and adjusted operating income year-over-year growth of 163% and 129%, respectively.
After 2025, CoreWeave may experience even more robust growth
While management's forecast for 2025 is encouraging, investors -- we hope -- aren't investing with their outlooks limited to one year's time. It's important, therefore, to consider what lies ahead for CoreWeave in 2026 and beyond. Fortunately, investors received some considerable clarity in that regard with the company's recent announcement that it will acquire Core Scientific (CORZ 4.50%), a leader in data center infrastructure designed for AI computing and cryptocurrency mining.
Data centers catering to AI computing require significant amounts of power to keep operations running smoothly, and the acquisition will help fortify CoreWeave's position with respect to its power needs. Already, CoreWeave relies on Core Scientific for about 0.8 gigawatts (GW) of its power capacity, and with the acquisition, it will gain access to the other 0.5 GW of power capacity that Core Scientific possesses. But wait, there's more. CoreWeave will also have another 1 GW of expansion capacity. All of this removes a potential roadblock that CoreWeave could encounter in trying to expand its data center infrastructure.
Another encouraging sign for CoreWeave's future is the synergies to be realized after the acquisition is completed. According to management, CoreWeave will immediately recognize the benefit of eliminating over $10 billion in lease liability overhead costs over the next 12 years. Operating a more efficient model once the acquisition is done, CoreWeave projects it will recognize $500 million in annual run-rate cost savings by the end of 2027.
Is now a good time buy CoreWeave stock?
Although CoreWeave recognizes the upcoming acquisition of Core Scientific -- expected to be completed later this year -- as an engine to drive growth, the market has mixed feelings. As of this writing, shares of CoreWeave are down about 17% since the announcement of the acquisition.
With greater clarity into the power supply for CoreWeave's operations and the billions the company will save in lease liability overhead costs, there's a lot to like about the acquisition, making CoreWeave even more attractive as an opportunity to ride the powerful wave of AI growth.
Compounded with the fact that the company still reports a net loss, there's risk in a CoreWeave investment in that there's no certainty the company will execute its growth plans. For those investors comfortable with the inherent risks, though, today seems like a good time to click the buy button on CoreWeave stock.
