Neocloud infrastructure provider CoreWeave (CRWV -2.42%) went public in March last year, and shares of the company have shot up by an impressive 163% since then.
However, CoreWeave stock has experienced significant volatility since its initial public offering (IPO). Concerns about the company's mounting debt and potential competition from a key customer explain why its stock has slipped 42% from the 52-week high it reached in October last year.
But that's a good thing for savvy investors looking to add a fast-growing company to their portfolios right now. CoreWeave's latest quarterly results clearly indicate that the company's red-hot growth is sustainable, and that's probably why its shares soared after it released its Q2 earnings report on Aug. 11.
Let's take a closer look at CoreWeave's results and check why this artificial intelligence (AI) stock has the potential to deliver multibagger returns over the next two years.
Image source: The Motley Fool.
CoreWeave's backlog keeps getting better
CoreWeave builds and rents out dedicated AI data centers to AI companies, hyperscalers, and other customers looking to run AI workloads in the cloud. Not surprisingly, the company has been witnessing phenomenal demand for its AI data centers.
NASDAQ: CRWV
Key Data Points
This explains why its Q2 revenue jumped by an impressive 112% year over year to $2.58 billion, slightly ahead of the $2.56 billion consensus estimate. What's more, CoreWeave's adjusted loss per share of $1.03 was lower than the Street estimate of $1.20. The company's guidance was the icing on the cake.
CoreWeave has increased its 2026 revenue guidance to a range of $12.4 billion to $13.2 billion, up from the earlier range of $12 billion to $13 billion. The company now expects to exit the year with annualized run rate revenue of $19 billion, which is higher than the earlier estimate of $18.5 billion. Clearly, CoreWeave anticipates its healthy growth to continue in 2027, and that's not surprising given its impressive revenue backlog.
CoreWeave's revenue backlog shot up from $30.1 billion in the year-ago period to $104.2 billion in the previous quarter. Even better, the company points out that this backlog doesn't include the $25 billion in net new customer commitments it has already received in the current quarter.
The ballooning backlog makes it clear that a recent report about Meta Platforms -- a key CoreWeave customer -- looking to rent out its existing cloud computing capacity to third parties isn't a problem for the neocloud specialist. That's not surprising, as CoreWeave notes that the demand for AI compute is accelerating.
Last month, CNBC spoke to several tech executives who pointed out that AI compute demand isn't slowing down. Chip designers are finding it difficult to fulfill demand, and Nvidia CEO Jensen Huang's comment that agentic AI workloads will require 1,000% more compute than generative AI over the next two years suggests that CoreWeave's AI infrastructure will continue to remain in hot demand.
CoreWeave remains well-positioned to capitalize on this lucrative market. The company was operating 1.5 gigawatts (GW) of active data center capacity at the end of Q2. It has added eight new data centers so far this year. Importantly, CoreWeave has 4.2 GW of contracted power capacity that it can use to build new AI data centers.
So, the company can sustain its outstanding growth over the long run, as its backlog will continue to expand due to rapidly increasing demand for AI data centers.
Here's why this AI stock can become a multibagger
CoreWeave expects to convert 40% of its massive revenue backlog into actual revenue within the next two years. That points toward cumulative revenue of just over $40 billion in the next two years. Moreover, it believes that it can convert another 39% of its backlog into revenue between the next 25-48 months.
Given that CoreWeave's backlog has been expanding at a nice clip and it is focused on aggressively expanding its data center capacity, it is easy to see why analysts are forecasting robust revenue growth at CoreWeave.
Data by YCharts
For a company that's clocking outstanding revenue growth, CoreWeave stock trades at just 7.2 times sales. That's almost in line with the U.S. tech sector's average sales ratio of 7.6x. CoreWeave should ideally trade at a premium, but even if it trades at a discounted 5x sales at the end of 2028 and clocks $41 billion in revenue (based on the consensus estimate in the chart above), its market cap could jump to $205 billion within the next three years.
CoreWeave has a market cap of $58 billion as of this writing, which means that it has the potential to indeed become a multibagger by 2028. Also, CoreWeave's sales multiple suggests that it is a value stock, which is why it makes sense to buy it before it goes on a bull run.
