CoreWeave (CRWV 9.00%) has been the biggest IPO of the year so far.
After weaker-than-expected demand for its IPO, CoreWeave went public for a lower price than it had targeted, and Nvidia came in and invested in the stock to help prop up the offering.
The stock then slumped as the broad market sold off in response to the "Liberation Day" tariffs that President Trump issued.
However, after bottoming in April, CoreWeave began to rally, tracking with a boom in AI stocks. From its IPO price of $40, the stock soared as high as $187 on June 20, a nearly 400% gain.
Since then, the stock has come down to earth, falling 28% from that peak. Should investors buy the dip in the stock? Let's take a closer look.
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High risk, high reward
CoreWeave is one of the fastest-growing stocks in the market, and because of its growth and lack of profitability, it's also one of the highest-risk stocks.
CoreWeave started out as a crypto mining company, but using its stockpile of GPUs, it pivoted to an AI-focused cloud infrastructure business during the crypto winter in 2019, and its business began to take off in 2023, after ChatGPT was launched. In fact, its revenue grew by more than 100x from 2022 to 2024, and its growth rate remained scorching hot in the first quarter of 2025 as revenue jumped 420% to $981.6 million.
CoreWeave depends on building out data centers so it can supply its customers, like Microsoft, Nvidia, and OpenAI, with computing capacity.
As a result, the company has had to take on a lot of debt to purchase the GPUs to run its AI infrastructure business. In the first quarter, the company reported an operating loss of $27.5 million, but its interest expense was $263.8 million because it has $8.7 billion in high-interest debt. Its interest rate is a reflection of the risk debt-holders see in the business, as the company barely had any revenue two years ago.
CoreWeave has several other risks, including high customer concentration. Last year, Microsoft made up more than half of its revenue, and a report that it was opting out of buying more data center capacity from CoreWeave helped put pressure on the IPO.
It's also dependent on continuing growth in AI, and it needs to be able to turn a profit on the GPUs it buys before it has to replace them. The business is so new, and growing so quickly, that it's not clear if it will be able to do that. In the first quarter of 2025, the company spent $1.4 billion on capital expenditures, more than its revenue, and the company expects to spend $20 billion to $23 billion on AI infrastructure this year.
Any company of CoreWeave's size growing by 420% deserves investor attention, but investors should be aware of the risks as well.
Is CoreWeave a buy?
For the right kind of investor, CoreWeave looks like a buy, despite the risks noted above.
The company's soaring growth can't be ignored, and the cloud infrastructure business model has been highly profitable for more-established companies like Microsoft and Amazon.
Given the growth opportunity in front of it, CoreWeave is unlikely to be profitable for years, and it could be years before the company even starts to improve its unit economics. Based on its revenue run rate, its price-to-sales ratio is 15, which seems pretty low for a company growing this fast.
For risk-tolerant investors interested in a pure-play AI stock, getting some exposure to CoreWeave makes sense, and dollar-cost averaging is a good way to do it. At this point, the stock is likely to continue to be volatile, and there should be more dips to capitalize on in the future.
