Artificial intelligence (AI) infrastructure provider CoreWeave (CRWV -15.50%) is tapping into incredible demand for AI computing capacity. The company leases its infrastructure to hyperscalers, AI labs and enterprises, a model that is driving rapid-fire revenue growth. CoreWeave reported revenue of $1.21 billion in the second quarter of 2025, up from less than $400 million in the prior-year period.
CoreWeave is profitable on an operating basis, but just barely. The company squeaked out an operating income of $19.2 million in the second quarter, a big drop from the same period last year. Net income is deep in the red thanks to interest payments on CoreWeave's massive debt load, and cash flow is in negative territory as well. While CoreWeave is growing fast, profitability is a real problem.
A look at the numbers
CoreWeave reported a net loss of $290.5 million, and an adjusted net loss of $130.8 million, in the second quarter. Interest payments consumed $267 million, putting the company on pace to shell out more than $1 billion in interest over the next year. CoreWeave has racked up more than $11 billion in debt, and it's paying high rates to service that debt. The company recently raised $2 billion by selling unsecured notes that carry an interest rate of 9.25%.
Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA), which backs out depreciation and interest, soared to $753 million in the second quarter, but this metric is not a meaningful measure of anything. Depreciation is a real and growing expense for CoreWeave, and interest payments are eating up a growing proportion of revenue.
Because CoreWeave is investing heavily in expanding its data center footprint, free cash flow is predictably negative due to heavy capital spending. However, cash flow from operations is also negative. Operating cash flow was a loss of $251 million in the second quarter, worse than the $118 million loss in the prior-year period. Cash flow can be volatile, depending on the timing of payments coming in and going out, but this is still concerning.
Image source: Getty Images.
Dependent on the AI hype train
AI is a genuinely useful technology, and it will likely change countless industries. But there's also a mountain of hype that's driving sky-high start-up valuations and massive infrastructure build-outs. An underwhelming release of OpenAI's latest GPT-5 AI model seems to throw cold water on some of the more audacious claims being made, like that AI "superintelligence" is just a stone's throw away.
CoreWeave is funding its expansion and its current operations through debt. If the cracks that are starting to appear in the AI growth story widen, raising cash could become more difficult or more expensive. And if it turns out that the industry is overbuilding AI infrastructure, a real possibility given the massive commitments being made by tech giants and governments, the business model of leasing AI capacity would become even less profitable.
CoreWeave is valued at around $57 billion, even after the stock tumbled following its second-quarter report. That's more than 20 times the company's book value, or assets minus liabilities. Even under a rosy scenario for the AI industry, it's hard to get behind that kind of valuation.
CoreWeave is playing a critical role in the AI industry right now by providing AI computing capacity that's desperately needed by hyperscalers and other AI providers. But with profits and cash flow taking a dive, and the pace of progress in the AI industry potentially slowing down, CoreWeave stock looks like a risky bet.
