The AI boom has unleashed a frenzy of investment in cloud infrastructure, with CoreWeave emerging as one of its most controversial players. Positioned as a specialized GPU cloud provider, the company has ridden the wave of demand for Nvidia’s cutting-edge chips, securing billion-dollar contracts with tech giants like Microsoft. Yet beneath its meteoric revenue growth lies a business model riddled with red flags: extreme customer concentration, crushing debt loads, and existential dependence on Nvidia’s supply chain.
From its tepid IPO to its
negative interest coverage ratio, the numbers paint a cautionary tale. While
the AI revolution has rewarded aggressive infrastructure bets, CoreWeave’s
survival hinges on factors beyond its control: Nvidia’s pricing power, Microsoft’s
spending whims, and its ability to outspend deep-pocketed rivals. For
investors, the central question isn’t just whether AI demand will persist—but
whether CoreWeave can escape its debt trap before the hype fades.
This analysis unpacks the
company’s vulnerabilities, from its fragile balance sheet to its place in the
GPU supply chain pecking order, offering a clear-eyed view of the risks behind
the AI infrastructure gold rush.
1 Extreme Customer Concentration
CoreWeave’s revenue is highly
concentrated, with Microsoft alone contributing ~62% of its revenue in 2024 and
another unnamed client accounting for 15%. This means nearly 77% of CoreWeave's
revenue depends on just two customers. If Microsoft cuts spending or shifts to
its own Azure AI infrastructure, CoreWeave’s business could face a severe
decline.
2 High Debt and Unsustainable Growth
CoreWeave has relied on
aggressive borrowing to finance its rapid expansion, amassing over $12 billion
in debt. Given the capital-intensive nature of AI cloud computing, CoreWeave is
burning cash at an alarming rate. In 2024, the company posted a $863 million
net loss despite skyrocketing revenue.
With rising interest rates and
high infrastructure costs, CoreWeave’s ability to sustain its growth without
further dilution (selling more shares) is in question.
3 Nvidia Dependency is a Double-Edged Sword
CoreWeave’s business relies
almost entirely on Nvidia GPUs, particularly H100 and H200 chips. While this
has been a competitive advantage in the short term, it poses major risks:
- Supply
Risks: Nvidia prioritizes larger cloud players like Microsoft, Amazon, and
Google, limiting CoreWeave’s ability to scale.
- Pricing
Power: Nvidia controls GPU pricing, meaning CoreWeave has no bargaining
leverage and faces potential cost squeezes.
- Competition
from Nvidia’s Own Cloud Services: If Nvidia expands its own AI cloud
offerings, it could compete directly with CoreWeave.
4️ Intense Competition from Big
Tech & Specialized GPU Clouds
CoreWeave is competing with
deep-pocketed hyperscalers like AWS, Google Cloud, and Microsoft Azure, all of
whom offer more mature AI cloud solutions. Meanwhile, alternative providers
like Lambda Labs, Paperspace, and RunPod offer cheaper and more flexible GPU
cloud services.
If pricing pressure intensifies,
CoreWeave may struggle to differentiate itself beyond its current Nvidia-heavy
strategy.
5️ Weak IPO Performance &
Overvaluation Concerns
CoreWeave’s March 2025 IPO was
underwhelming, pricing at $40 per share (below expectations). The stock failed
to gain momentum, closing at the same price. This suggests investor skepticism
about its valuation and prospects.
With a debt-heavy balance sheet,
customer concentration risks, and capital-intensive operations, CoreWeave lacks
the financial flexibility to navigate a downturn in AI spending.
Debt Analysis
CoreWeave has undertaken considerable debt to finance its
rapid expansion in AI-focused cloud infrastructure:
- Total
Debt: As of 2024, the company reported approximately $10.62 billion
in total debt.
- Debt
Financing Activities:
- August
2023: Secured a $2.3 billion debt financing facility led by
Magnetar Capital and Blackstone, aimed at acquiring hardware for existing
client contracts and expanding its workforce.
- May
2024: Announced a $7.5 billion debt financing agreement with
participation from investors including Blackstone and Magnetar, intended
to develop high-performance computing infrastructure for existing
enterprise clients and AI innovators.
- Debt-to-EBITDA
Ratio: The company's Debt/EBITDA ratio stands at 20.69,
indicating a high level of debt relative to its earnings before interest,
taxes, depreciation, and amortization.
- Interest
Coverage Ratio: With an Interest Coverage ratio of -1.06,
CoreWeave currently lacks sufficient earnings to cover its interest
expenses, highlighting potential challenges in meeting debt obligations.
Valuation Metrics: CoreWeave vs. Cloud Computing Sector
Evaluating CoreWeave's valuation involves comparing its
financial ratios to industry standards:
- Price-to-Earnings
(P/E) Ratio:
- CoreWeave:
Due to reporting net losses, CoreWeave does not have a positive P/E
ratio, rendering this metric inapplicable.
- Cloud
Computing Sector: As of early 2025, the average P/E ratio for
companies in the cloud computing industry varies widely, typically
ranging from 20 to 35, depending on growth prospects and
profitability.
- Price-to-Sales
(P/S) Ratio:
- CoreWeave:
Specific P/S ratio data for CoreWeave is not provided in the available
sources.
- Cloud
Computing Sector: The average P/S ratio in the sector often falls between
5 and 10, reflecting investor expectations for revenue growth.
Financial Performance Highlights
- Revenue
Growth: CoreWeave experienced remarkable growth, with revenues increasing
from $16 million in 2022 to $1.9 billion in 2024.
- Profitability
Concerns: Despite revenue growth, the company reported a net loss of $863
million in 2024, attributed to substantial investments in infrastructure
and expansion efforts.
Now a question strikes an investor mind that there is
a rush to acquire Nvidia GPU’s with huge orders, who has the highest numbers of
H100/H200 in a rough landscape
CoreWeave
has significantly expanded its GPU infrastructure to meet the growing demands
of AI and high-performance computing workloads. As of March 2025, the company
operates a fleet of approximately 250,000 NVIDIA GPUs, primarily
consisting of H100 models, along with some H200 and GB200
versions.
While the exact number of H100 GPUs is not specified, it's
evident that they constitute the majority of CoreWeave's GPU inventory. For
instance, their supercomputer in Plano, Texas, dedicated to NVIDIA, utilizes
over 3,500 H100 GPUs.
In summary, CoreWeave's H100 GPU count is substantial,
forming the backbone of their extensive GPU fleet.
Looking at the other players?
As of
early 2025, the companies with the largest inventories of NVIDIA's H100 and
H200 GPUs are:
- Microsoft:
In 2024, Microsoft acquired approximately 485,000 NVIDIA Hopper GPUs,
encompassing both H100 and H200 models. This investment supports
Microsoft's AI services and Azure cloud offerings.
- Meta
(Facebook): By the end of 2024, Meta aimed to possess 350,000 H100
GPUs to bolster its AI computing capabilities, focusing on developing
advanced AI models, including artificial general intelligence (AGI).Meta
also has ambitious targets for 2025.
- Tesla:
Tesla holds around 35,000 H100 GPUs, utilized for AI projects such
as the Robotaxi initiative and the Dojo supercomputer. CEO Elon Musk has
indicated plans to further invest in AI hardware.
- xAI
(Elon Musk's AI Startup): xAI has acquired approximately 100,000
H100 GPUs for its AI endeavors, reflecting Musk's commitment to
advancing AI technologies.
- Lambda
Labs: This AI infrastructure provider has secured about 30,000 H100
GPUs to support its public cloud services tailored for machine
learning workloads.
A Final Note, favorite Speculative investor Cathy Wood
under its ARK Umbrella added Coreweave to her portfolio here
📉 Conclusion: Core Weave
is a High-Risk, Low-Moat AI Cloud Play
While the AI boom has fueled massive short-term growth,
CoreWeave’s business model is fundamentally fragile due to:
✔ Heavy reliance on Microsoft
& Nvidia
✔ Unsustainable debt-driven
expansion
✔ Fierce competition from Big
Tech & GPU cloud startups
✔ Weak IPO performance signaling
market skepticism
Core Weave’s aggressive
debt-financed growth strategy has enabled rapid expansion but introduces
significant financial risk, especially given its current inability to cover
interest expenses with earnings. The absence of positive earnings precludes
meaningful P/E ratio comparisons, and while revenue growth is impressive,
sustained profitability remains uncertain. Potential investors should carefully
assess these factors and consider their risk tolerance before making investment
decisions.
For long-term investors,
CoreWeave appears more like an overleveraged hype-driven AI play than a
sustainable, high-moat business.
If I say in one sentence it's a
risky play since the main players are either at the point of innovating their
chip strategy or even evolving to have their own GPU’s created custom suited to
their models, so these service based sectors can sustain for just so long ,
that one needs to just see through.
In a Nutshell: CoreWeave is
walking a tightrope—while Big Tech builds its own GPUs and Nvidia plays
both supplier and competitor, betting on a middleman in this high-stakes chip
race is like shorting a parachute before the jump. The clock is ticking, and
the landing looks… speculative.
Stay Figgy,
The Figured Figs Team 🌱
Disclaimer: “This article is for informational purposes only and does not constitute financial, investment, legal, or tax advice. Readers are encouraged to consult a licensed professional before making any financial decisions."
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