It's been nearly a year since CoreWeave (CRWV +0.68%) went public. The company, which rents out computing power and access to cutting-edge chips from Nvidia, has been a fairly hot buy. Although it's nowhere near its high of $187, the stock has still generated gains totaling 86% since it began trading last March.
The company's growth rate has been slowing down, but it still more than doubled its revenue in its most recent quarter. Plus, it's eyeing more growth opportunities ahead. With a market cap of around $40 billion, this is a big company, but nowhere near what the tech giants are worth, including the big players in artificial intelligence (AI). Could CoreWeave be an underrated option for AI investors right now?
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Its growth rate is impressive, but its bottom line isn't
On Feb. 26, CoreWeave reported its fourth-quarter and year-end results for 2025. CEO Michael Intrator called it a "defining year" for the business, noting that CoreWeave "became the fastest cloud in history to reach $5 billion in annual revenue."
The tech company finished the year with $5.1 billion in revenue, which was an increase of 168% from the previous year, when its top line totaled $1.9 billion. Unfortunately, this didn't lead to an improvement in the bottom line, as CoreWeave incurred an operating loss of $46 million, whereas in the previous year its operating profit was $324 million. And this is even before factoring in interest expense of $1.2 billion, which is due to the company's high debt load (a year ago, its interest expense totaled $361 million).
NASDAQ: CRWV
Key Data Points
CoreWeave stock has potential, but it also carries significant risk
There are loads of opportunities for more growth for CoreWeave, given the ongoing investments into AI and demand for Nvidia chips. The company says that its backlog totaled $66.8 billion by the end of the year -- that's more than four times what it was at the start. Management believes it's well-positioned to benefit from AI-powered growth opportunities. The analyst consensus price target for the stock is currently $122.35, implying a near-term upside of around 70% from where it trades today.
However, with a lack of profitability and high dependence on its relationship with Nvidia, this isn't a terribly safe stock for investors to own. If CoreWeave is struggling to turn a profit when AI spending is high, it begs the question of how it might do if that tapers off.
Investors appear to be second-guessing the stock of late, and rightfully so, given the uncertainty ahead and its underwhelming bottom line. Although it has been doing well over the past year, it's not a stock I'd rush to buy today.
