CoreWeave, which triggered a sharp plunge in AI-related stocks last month, announced results that exceeded market expectations and raised its annual outlook. The results confirmed that demand for AI infrastructure remains strong, but it remains unclear whether the company can ease investors’ concerns given its massive debt and financing costs.
CoreWeave announced its third-quarter results on the 10th (local time) and unveiled a funding plan to address investors’ doubts about the sustainability of its data-center expansion, which relies on borrowing.
CoreWeave’s shares fell more than 40% last month as doubts grew about the profitability of its AI infrastructure investments, which rely on large-scale borrowing. Selling pressure spread across AI-related stocks during the downturn, drawing attention to the company as a source of market distrust in AI investment.
Third-quarter revenue reached $3.66 billion (about 4.8 trillion won), up 168% from the same period a year earlier and beating the market estimate of $3.55 billion. The company also raised its annual revenue forecast from $12.4 billion–$13.2 billion to $13.0 billion–$13.3 billion.
Demand for AI infrastructure also appears solid. As of the end of the third quarter, the remaining performance obligations totaled $132.5 billion (about 176 trillion won), a substantial increase from the previous quarter. The company said customer demand amounted to roughly 10 times the computing capacity it can supply through next year.
The problem, however, is the enormous amount of capital required for investment and the associated financing costs. Total debt stood at $46.9 billion (about 62 trillion won) as of the end of the third quarter, and capital expenditures for data-center expansion this year are expected to reach $37 billion–$39 billion—roughly three times its annual revenue forecast.
Third-quarter operating profit was $270 million, but net interest expense reached $846 million, more than four times the operating profit. As a result, despite significant increases in revenue and operating profit, the net loss widened from $110 million in the same period last year to $790 million. In other words, financing costs are soaring as the business grows.
Accordingly, the company unveiled a plan to limit additional borrowing and raise funds based on customer contracts. CEO Mike Intrator explained, “Customer contracts come first, and investment follows.” Because the company builds data centers according to confirmed demand, lenders can secure collateral, while customers also help cover construction costs.
The company expects $9 billion in customer prepayments and deposits to come in over the next three months. It also said it would not issue additional unsecured corporate bonds at the parent-company level at current interest rates. The company maintains that it can repay its debt with cash flow generated by existing customer contracts, and set a target of turning a profit in the first half of 2028 on an adjusted basis.
Following the earnings announcement, CoreWeave’s shares rose as much as 5% in after-hours trading.
However, Bloomberg analyzed that it may be difficult to restore investor sentiment based on strong earnings alone. Even if demand for AI infrastructure continues to grow, it remains unclear whether large-scale investment dependent on borrowing will generate sufficient returns.
Reporter Park Chan cpark@aitimes.com
