Investing in CoreWeave: Key Insights on the NVIDIA‑Backed AI IPO

May 09, 2025 at 07:30 AM EDT

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When it comes to recent initial public offerings (IPOs), companies like Reddit (NYSE: RDDT) and Tempus AI (NASDAQ: TEM) have stood out due to their strong performance. However, likely the most talked-about company to go public in 2025 is one with strong ties to the most talked-about company in the market, NVIDIA (NASDAQ: NVDA). That company is CoreWeave (NASDAQ: CRWV), an AI cloud infrastructure stock. NVIDIA, the world’s largest semiconductor company, owns approximately 6% of CoreWeave’s outstanding shares. Although it got off to a rocky start, CoreWeave's stock has performed very well since going public, up around 34% as of the May 7 close.

But, despite the buzz around the company because of its ties to NVIDIA, investors should really ask: What does CoreWeave actually do, and how should they view the company going forward? The analysis below will answer these questions.

CoreWeave’s Mission: Get Cutting-Edge AI Infrastructure to Customers as Fast as Possible

Understanding "AI cloud infrastructure" can seem overwhelming, but CoreWeave's business isn't too complicated. The company has amassed around 250,000 NVIDIA graphics processing units (GPUs), highly advanced chips that power cutting-edge AI model training. The company rents out these GPUs to other firms that want to use them to train AI models.

This is similar to what companies like Microsoft (NASDAQ: MSFT) do through their Azure cloud business. Importantly, however, CoreWeave only rents out computing power for AI purposes, unlike Microsoft and other cloud providers, which rent out computing power for AI and traditional computing tasks.

CoreWeave places significant emphasis on its often being one of the first companies to get its hands on the latest GPUs. In its S-1 registration filing, the company says, “Our success is dependent on our ability to sustain innovation and technology leadership in order to maintain the competitive advantage of our solution and to bring the latest GPUs to market faster than our competition.”

Getting the latest GPUs to market first is vital to the company’s customers. This allows them to develop stronger AI models faster and for less money, gaining an advantage in the AI market. Additionally, the rapid demand for these GPUs means that there are often shortages.

CoreWeave's direct relationship with NVIDIA helps it avoid getting caught up in these shortages.

CoreWeave boosts its value for customers by offering access to its proprietary software stack. This tool helps customers manage and optimize the computing power they rent. Ultimately, this all ties back to one thing: helping customers train and deliver new AI models as quickly and cost-effectively as possible.

CoreWeave’s Financials: Demand Is Huge, But So Are Losses and Debt

Based on the financials, the company’s offerings are resonating with customers. In 2024, the company recorded exponential revenue growth of 737%. The company also runs at an operating profit, with a 19% adjusted operating margin in 2024.

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It also has around $15 billion in remaining performance obligations, indicating potential future revenue. This is about eight times the revenue the company generated in 2024. Still, the company is highly unprofitable overall, with a net income of around -$863 million in 2024.

Much of this is due to the company’s massive debt load of almost $8 billion. It had to make interest payments worth $360 million in 2024 to service this. The company is likely looking to take on even more debt, as it recently over doubled its revolving credit facility to $1.5 billion. The numbers look worse when considering free cash flow, which was nearly -$6 billion in 2024. This is due to its massive $8.7 billion in capital expenditures, which it uses to buy GPUs and related infrastructure.

Another somewhat troubling sign is the fact that the company’s three founders sold off almost $500 million worth of their shares prior to the IPO. This isn’t exactly a vote of confidence from the company’s leaders.

CoreWeave: An AI Opportunity to Watch Closely

CoreWeave is an interesting company. Its value proposition makes sense, aided by its tight-knit relationship with NVIDIA. It has seen explosive demand growth, but its overall financial position is precarious, to say the least. At this point, it feels premature to jump into this AI company that has a lot of hype around it.

Reevaluating after the company’s first earnings release on May 14 makes sense. This will provide more information and allow Wall Street analysts to question management on critical issues surrounding the firm.

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