Few companies in the artificial intelligence (AI) sector are growing as fast as CoreWeave(NASDAQ:CRWV) East. At its core, CoreWeave is a cloud computing company specializing in artificial intelligence infrastructure.
Given the current demand for AI computing capacity, it’s no surprise that CoreWeave is growing at an incredible pace and shows no signs of slowing down. Investors love being a part of this exciting growth, but is CoreWeave a smart investment option? Let’s take a look.
Image source: Getty Images.
With the money AI hyperscalers are spending to develop AI computing capacity, investors are starting to become a little wary of the potential return on these investments. Instead of developing all of the AI computing capacity themselves, it makes perfect sense to outsource some of that work to a company like CoreWeave. The AI hyperscaler reduces expenses by paying for CoreWeave’s computing power. It’s not as cost-effective as building a data center itself, but it allows for increased flexibility. This allowed CoreWeave to capture some high-profile clients, like Metaplatforms(NASDAQ:META)who signed a deal worth $14 billion.
CoreWeave’s growth rates have been nothing short of incredible and its results speak for themselves.
CRWV Revenue Data (Quarterly Growth YoY) by YCharts
Although the slowing growth rate may worry some investors, its revenue continues to more than double each quarter. This is a feat that few companies manage to achieve, putting CoreWeave in a unique position. However, there is one major concern with CoreWeave: its cost effectiveness.
There is an old saying that you have to spend money to make money. This is true, but there is also a limit. CoreWeave is certainly playing with this limitation, as questions arise about the lifespan of this expensive IT equipment.
CoreWeave primarily buys Nvidia graphics processing units (GPUs) for its servers. When used for AI workloads, GPUs can have a relatively short lifespan, with some estimates as long as one to three years. However, Nvidia’s product release cycle is also about a year, so the GPUs CoreWeave is buying now won’t be the hottest technology even a few months later. This creates a continuous cycle of capital inflows that can be sustainable if CoreWeave turns a profit.
But that’s not the case.
CoreWeave is rapidly improving its margin profile, but it is still not profitable at this time.
CRWV Profit Margin Data by YCharts
Given the short lifespan of the GPUs it buys, it’s critical that CoreWeave is cash flow positive and stays that way. However, I don’t think this will happen anytime soon as the company plans to increase its footprint.
But the opportunity may be there, as its revenue book now stands at $55.6 billion. Around 40% of this sum is expected to be used over the next 24 months. So if we split it in half, that means CoreWeave is expected to generate around $11 billion in revenue over the next 12 months. It expects to generate approximately $5.1 billion by 2025, demonstrating its continued impressive growth.
At the moment, I am not interested in CoreWeave due to its unprofitability and cash burn. However, if the company can reverse this trend and become profitable while growing at an astronomical rate, I’m definitely interested. CoreWeave is on my watch list for 2026, and it could enter my portfolio if it can break even, which will be a difficult task due to the massive capital expenditures required to build a data center.
For now, I still think compute vendors like Nvidia are making better investments because they don’t have to worry about an asset depreciating quickly because they’re selling them.
Before buying CoreWeave stock, consider this:
THE Motley Fool Stock Advisor The analyst team has just identified what they think is the 10 best stocks for investors to buy now…and CoreWeave was not one of them. The 10 selected stocks could produce monster returns in the years to come.
Consider when Netflix made this list on December 17, 2004…if you had invested $1,000 at the time of our recommendation, you would have $599,784!* Or when Nvidia made this list on April 15, 2005…if you had invested $1,000 at the time of our recommendation, you would have $1,165,716!*
Now it’s worth noting Equity Advisor the total average return is 1,035% — an overwhelming market outperformance compared to the 191% for the S&P 500. Don’t miss the latest top 10, available with Equity Advisorand join an investor community built by individual investors for individual investors.
See the 10 values »
*Stock Advisor returns November 10, 2025
Keithen Drury holds positions in Meta Platforms and Nvidia. The Motley Fool ranks and recommends Meta Platforms and Nvidia. The Motley Fool has a disclosure policy.
Meet the Epic Artificial Intelligence (AI) Stock With Skyrocketing Earnings was originally published by The Motley Fool
