CoreWeave (CRWV 6.06%) has become one of the most-watched stocks around, and this is thanks to the company's ability to deliver something in great need right now. The tech player offers customers access to top-performing graphics processing units (GPUs) to run their artificial intelligence (AI) workloads. These are the AI chips that handle jobs such as the training of large language models (LLMs) and other tasks crucial to the development and use of AI.
Since demand for compute has been soaring, CoreWeave has seen its revenue explode higher in recent quarters. And the stock followed, advancing more than 300% from its March initial public offering through the end of June.
In recent weeks, though, the stock has pared gains and now is heading for a gain of just under 80%. Investors have worried about the potential growth of an AI bubble, and that's slowed down the progress of AI stocks since the start of the month. So now is a good time to consider the following: Where will CoreWeave stock be in five years?
Image source: Getty Images.
Today's AI environment
First, let's consider the general AI landscape today and where CoreWeave fits into this picture. As mentioned, companies that aim to develop and use AI are in great need of compute, and for this, they can either build out their own data centers, equipped with AI chips, or they can rent GPUs through a cloud service provider.
CoreWeave competes against major cloud players such as Amazon and Microsoft, but the company has carved out a share for two reasons. First, demand is so high that there's room for many cloud service providers to gain business. And second, CoreWeave focuses on AI workloads, allowing the company to deliver services optimized for AI. Renting GPUs rather than buying them offers AI customers flexibility, and in a lot of cases, cost savings -- many have realized this, and that's prompted them to turn to CoreWeave.
And right now represents a key moment for companies like CoreWeave. It's a time of great investment and a time of high demand for their offerings. Nvidia founder and chief Jensen Huang sees AI infrastructure spending rising to as much as $4 trillion over the coming five years. This suggests that CoreWeave and peers will spend to build out their offerings -- and customers will be there ready to snap up new capacity.
NASDAQ: CRWV
Key Data Points
Nvidia and CoreWeave
Speaking of Nvidia, this AI chip leader is an important part of the CoreWeave story. Nvidia owns about 7% of CoreWeave stock, and CoreWeave is a key provider of the company's chips. For example, it was the first to make Nvidia's Blackwell architecture and update Blackwell Ultra widely available to customers.
All of this has translated into growth for CoreWeave, with revenue more than doubling year-over-year in the recent quarter. And CoreWeave has signed deals with major AI players, from OpenAI to Meta Platforms.
Of course, as mentioned above, all of this involves a lot of investment today and down the road. The company predicts $12 billion to $14 billion in capital expenditures for the full year 2025 and more than double that next year. CoreWeave has increased its debt to support investments, but the company is focused on decreasing its cost of capital as this story progresses. That will be a point investors should keep an eye on in the coming quarters.
Revenue and stock performance
Now, let's get back to our question: Where will CoreWeave stock be in five years? If the demand for compute continues as market experts like Nvidia's Huang expect, CoreWeave should see revenue and potentially stock performance take off.
Let's use some math to illustrate this. Analysts forecast that CoreWeave's annual revenue may reach about $18 billion in 2027. With this level of revenue, the stock price could reach about $320, and CoreWeave would maintain a price-to-sales ratio of around 6.9 -- the level it is today. This represents a 420% increase in the stock price, something that's possible for a high-growth company over a few years.
Of course, this is just an example, and it only brings us out to 2027. It's also important to keep in mind that any shifts in the economy or unexpected headwinds within the AI space could alter this scenario.
But, if all goes rather smoothly for CoreWeave and demand for compute continues to march higher, this AI stock could very well soar in the triple digits over the coming five years.
