CoreWeave (NASDAQ: CRWV), an AI infrastructure provider, recently announced its Q1 results, reporting a loss of $1.49 per share on revenue of $982 million. This exceeded market expectations of $853 million in revenue. However, its capital expenditures plan of $20-23 billion was much higher than the $18 billion anticipated by the analysts and it didn’t sit well with investors – triggering a decline in the stock in after-hours trading. Separately, see – Is UNH Stock Now A Falling Knife?
Since its IPO at $40 per share in March, CRWV stock has surged past $65 earlier this week, significantly outperforming the NASDAQ index’s 11% gain over the same period. CoreWeave’s strong backlog of over $25 billion has contributed to its stock’s impressive performance. However, if you prefer a less volatile investment alternative, consider the High Quality Portfolio, which has consistently outpaced the S&P 500 and has delivered over 91% returns since inception.
CoreWeave’s Q1 revenue of $982 million reflects an impressive 420% year-over-year increase. CoreWeave has secured significant contracts with leading AI labs, hyperscalers, and enterprises, including OpenAI, Microsoft, IBM, Meta, and Mistral AI, aiding its revenue growth. The first quarter also saw OpenAI solidify its relationship with CoreWeave by committing to a five-year deal worth up to $11.9 billion. This significant agreement underscores the growing importance of CoreWeave’s infrastructure for OpenAI.
Additionally, CoreWeave’s adjusted EBITDA margin increased by 700 bps to 62%, up from 55% in the previous year’s quarter. However, the adjusted net loss widened to $150 million from $24 million in the prior-year quarter. Higher revenue offset by a contraction in net margin resulted in adjusted net loss of $0.61 per share.
Looking ahead, CoreWeave expects Q2’25 revenue of $1.08 billion and full-year 2025 revenue of $5.0 billion, at the mid-point of the provided range. This fares better than the consensus estimates of $987 million and $4.6 billion, respectively.
CRWV stock has shown some volatility since its debut. In contrast, the Trefis High Quality Portfolio, which consists of 30 stocks, is significantly more stable. It has also comfortably outperformed the S&P 500 over the past four years. Why? This portfolio comprises stocks that have historically provided stronger returns with lower risk compared to the broader index, offering a more predictable performance, as evident in the HQ Portfolio performance metrics.
Given the current economic uncertainty surrounding tariffs and ongoing trade disputes, could CoreWeave sustain its upward trajectory? Since the stock was only listed last year, there is no historical data to assess its historical valuation multiple. At its current price of approximately $63 (after market hours), CRWV trades at 13 times trailing revenue. With sales increasing by over 700% in 2024, over 400% in Q1, and it’s expected to grow 2.3x this year, the company’s high valuation multiple appears justified. However, the company’s high capital expenditures and widening losses remain key near-term concerns.
Read the full article here
