Bengaluru — CoreWeave’s shares plunged nearly 9% in premarket trading on Tuesday after it scaled back its annual revenue forecast due to data centre hiccups despite strong demand for its AI services.
The Nvidia-backed company’s margins are pressured by soaring infrastructure expenses, rising AI chip prices and intensifying competition for computing power, weighing on profitability.
CoreWeave said it faced delays with a top data centre partner, but that the affected customer had agreed to extend the contract, keeping the deal’s total value intact. It did not name the client.
“The quarter revealed something that investors have feared for a while - operational risk,” analysts at Barclays said. “This is the first time for the young AI infrastructure industry that this has come up and will likely remind investors that these large scale AI data centres are not easy engineering projects.”
Once a major Ethereum miner, CoreWeave has pivoted to capitalise on the AI boom by leasing Nvidia GPUs and securing deals with tech majors such as Meta and ChatGPT-maker OpenAI.
The stock, which has climbed about 164% since its March initial public offering, reported third-quarter revenue of $1.36bn, topping analysts’ average estimate of $1.29bn, according to data compiled by LSEG.
The company’s adjusted operating income margin slipped to 16% in the third quarter from 21% a year earlier. “This seems like an incrementally worse setup for the day in the future when demand isn’t off the charts,” analysts at MoffettNathanson said.
Reuters
