Rough day for CoreWeave (CRWV +0.60%) shareholders. Already drifting lower from its early May peak, as of 12:25 p.m. ET the stock's down 12.7% on Wednesday alone, reaching a new multi-week low as a result.
Blame Facebook parent Meta Platforms (META 2.79%), mostly, which now poses a more direct threat to CoreWeave's future growth.
New competitor
CoreWeave is an artificial intelligence data center operator, if you aren't aware, offering cloud-based access to AI infrastructure to companies that need it but don't want to build such facilities for themselves. OpenAI, Cloudflare, and Perplexity are just some of its customers contributing to Q1's revenue of nearly $2.1 billion, up 111% year over year. Analysts were looking for similar growth this year and through next year.
NASDAQ: CRWV
Key Data Points
Now that projected triple-digit growth is threatened. On Wednesday, Bloomberg reported Meta is establishing a new business to sell access to its artificial intelligence computing capacity that it's already built but isn't using (yet), confirming an idea that CEO Mark Zuckerberg first floated at Meta's annual shareholder meeting in May.
It's not clear how much artificial intelligence capacity Meta has, or how much excess it has to offer. It isn't insignificant, though. The company is budgeting up to $145 billion worth of capital expenditures for this year alone -- largely on AI infrastructure -- as part of a sizable wave of past and future investment in such technology. Its sheer scale easily dwarfs CoreWeave's.
Don't flinch
It's a concern for CoreWeave shareholders to be sure. This is a case, however, where bigger isn't necessarily better.
See, CoreWeave's something of a specialist, built from the ground up with machine learning, training, inference, and now agentic AI for third parties in mind. Although Meta can certainly develop specialized solutions as well, Facebook remains its breadwinning priority, while CoreWeave has a strong developmental headstart on Meta's new third-party artificial infrastructure business.
There's also likely to be more than enough AI business to go around for both parties.
More to the point for current or prospective CoreWeave shareholders, today's reporting on Meta's new ambition isn't quite the catastrophe the stock's sudden setback suggests it is. And it's certainly not a reason to sell it if you weren't already on the fence. Indeed, given that the underlying investment thesis hasn't really changed, if you were considering buying a stake in CoreWeave before today, Wednesday's stumble is a compelling entry opportunity.
