CoreWeave (CRWV +1.66%) is an interesting stock. It's one of the fastest-growing stocks on the market and has incredible demand for its AI computing power. However, it's very unprofitable, although there's a good reason for that.
Some investors may be hesitant to invest $500 in CoreWeave, but if they do, what will that be worth by 2030? Let's take a look and see where the stock could be heading.
Image source: The Motley Fool.
CoreWeave is capitalizing on a generational investment opportunity
CoreWeave is a neocloud computing provider, which makes it a cloud computing company that specializes in AI computing power. Cloud computing is a pretty established industry, which makes it easy for investors to know what a fully mature company looks like. The best examples are Amazon (AMZN -0.37%) Web Services (AWS) and Google Cloud from Alphabet (GOOG -1.70%) (GOOGL -1.70%). These two are dominant in the industry and generate a massive amount of revenue and profits.
NASDAQ: CRWV
Key Data Points
CoreWeave isn't quite there. While its revenue base is starting to grow, it's far from profitable. This is for good reason: There's a massive amount of market share to capture right now. The AI hyperscalers are looking to acquire as much computing power as possible, as fast as possible, and renting it from another provider like CoreWeave is a genius idea. Meta Platforms (META +0.10%), one of CoreWeave's largest clients, told investors during Q2 that it could rent out the computing power for a "significant premium" over what it pays. So, whatever CoreWeave is charging isn't a lot compared to what its clients want.
By capturing market share early on by offering its services for lower prices and rapidly expanding to meet needs, CoreWeave could easily start to raise rates on captive clients that need the computing power. This could drive it toward profitability down the road, which could make it a compelling investment.
Furthermore, CoreWeave is expected to deliver impressive growth over the next few years. CoreWeave's revenue backlog sits at over $104 billion, with about 40% of that revenue expected to be recognized in the next two years, 39% in two to four years, and the other 21% more than four years down the road. That's an impressive growth pipeline, and if it can convert on that plus capture new business, it could result in a pretty impressive company. But what will that be worth?
The AI build-out is going strong
There are countless projections that the AI build-out will last through at least 2030, but understanding where that puts CoreWeave is a bit difficult. Nobody knows what kind of growth it will deliver in 2028 or 2029, so investors need to take an educated guess.
Wall Street analysts expect CoreWeave to grow its revenue by 104% in 2027 to $26.3 billion. If it can increase its revenue at a growth rate of 50% per year from 2028 to 2030, indicating huge demand for AI computing power, its revenue would reach $89 billion. I don't think that's an outlandish projection, as Nvidia (NVDA +1.09%) estimates that global data center capital expenditures will reach $3 trillion to $4 trillion by 2030. For 2027, it estimates the big five hyperscalers will spend about $1.3 trillion. That's monster growth, and CoreWeave will be one of those companies that's expanding its footprint due to huge AI demand.
If CoreWeave can achieve a 35% operating margin, similar to what AWS and Google Cloud have achieved, and trade for 25 times operating income, that would make CoreWeave a $777 billion company. Considering that CoreWeave is a $47 billion company today, that indicates the stock could more than 15x, turning a $500 investment into more than $7,500.
This may make CoreWeave sound like a no-brainer investment, which it may be. However, it requires the company to achieve a high profitability rate and continue growing rapidly. I think it can continue its rapid growth rate with massive demand for AI computing power, but achieving that level of profitability won't be easy. However, I think CoreWeave has enough growth that even if it falls short of the projection above, it will still be a market-beating stock.
