Sam Altman, co-founder of OpenAI, made headlines this past week calling out how demand for AI is surging so fast that their Nvidia GPUs are literally melting. Just yesterday, he tweeted that when ChatGPT first launched, it took five days to hit 1 million users. Now? They’re adding 1 million users in a single hour. That’s not just exponential growth — it’s exponential usage.
So who's stepping in to help OpenAI keep up with this explosive demand? Enter CoreWeave — ticker symbol CRWV — a company purpose-built for AI infrastructure. Just last month, OpenAI signed a massive $12 billion deal with CoreWeave to keep their AI models running smoothly.
CoreWeave just went public this week. The IPO opened a bit soft, dipping below $40 a share, but shares have started to rally, especially as investors wake up to how hot the GPU rental business is right now. CoreWeave’s entire model is centered on buying Nvidia GPUs, building the infrastructure to support them, and renting them out to AI firms — and that demand is only accelerating.
Nvidia’s not just a chip supplier here — they’ve also taken a 5-6% ownership stake in CoreWeave, showing how deeply aligned their interests are. So what makes CoreWeave special?
According to management, it comes down to three things:
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Purpose-built for AI — unlike traditional cloud providers, their infrastructure is optimized specifically for AI workloads.
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Superior performance and efficiency — faster training, faster inference, fewer failures.
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Hyperscale-ready — their setup allows rapid scaling when AI usage spikes.
That AI focus creates a flywheel effect: better performance attracts more customers, leading to more workloads and better insights, which in turn leads to even greater performance. That’s how they’ve scaled from $20M in revenue to $1.9B in just a few years.
Today, CoreWeave operates with:
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250,000 GPUs
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1.3 GW of contracted power
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32 data centers
They are literally one of the backbones of the AI revolution.
With $15 billion in total performance obligations and contracts averaging four years, CoreWeave is building a long-term revenue base. If they hit $1.9B in 2024 and are guiding to $15B over four years, that suggests they could be on track to $3B+ in annual revenue — and growing.
OpenAI, for its part, just raised a rumored $40 billion round. That’s more capital that could flow into infrastructure — and potentially into CoreWeave — to keep up with exploding usage.
Now let’s talk economics. The company claims a 2.5-year cash payback period on its GPU infrastructure investments. That means if they invest $1B in GPUs today, they expect to recoup that investment within 30 months — and everything after that is margin expansion and potential profit.
That said, this is still a high-risk, high-reward play. In 2024, CoreWeave generated $2.7B in operating cash flow, but also spent $8.7B in capex, mostly on GPUs and data center expansion. That’s being funded through debt and other financing — classic infrastructure leverage. So yes, it's capital-intensive. But if they can maintain growth, capture more AI workload market share, and improve cash flow over time, the upside could be significant.
Short Tech Lifecycles Add Uncertainty
Another layer of uncertainty with CoreWeave is that this isn't like investing in traditional infrastructure—say, a power plant—where you can reasonably expect decades of useful life. With GPUs, the lifecycle is far shorter. We're talking maybe five to six years, possibly even less depending on how fast newer, more advanced chips are rolled out. That creates a risk: even if the company achieves a solid two-and-a-half-year payback period, can it stretch to years four and five where the real profit starts rolling in? Or will the tech already be outdated and less competitive by then?
Stacking Business Risks: Cash Burn + Obsolescence
So you’re not just facing high capital intensity and massive upfront investments—CoreWeave is burning a lot of cash—but you also have real technological obsolescence risk. That’s the tightrope they’re walking.
A Personal Note: Not Financial Advice
Now, just to be clear, this isn’t financial advice—I'm simply sharing how I personally think about it.
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Valuation Snapshot: What the Market Is Pricing In
Back to CoreWeave. At a current stock price around $44 per share, that puts their market cap somewhere in the $18 to $20 billion range. But when you look at their pro-forma balance sheet, they’ve only got around $2 billion in equity. That means the market is pricing in huge expectations for future returns—massive optimism.
Balance Sheet Breakdown: Big Assets, Big Leverage
To break it down: CoreWeave has about $20 billion in total assets and carries a significant debt load. After their IPO, they’re sitting on about $2 billion in net equity. Yet the market is valuing them 9 to 10 times that. Why? Because investors believe GPU shortages will continue and that CoreWeave’s model—renting out these high-demand GPUs—will generate high returns on equity.
Comparing with Value Plays: My Personal Preference
Personally, I prefer investing in companies trading closer to book value that already have a long-term record of strong returns on equity. For example, one of my top holdings has nearly a 40-year track record of generating ~18% ROE—and it trades near book value. That’s the type of value + quality combo that really gets me excited.
The Bull Case: Chasing 5x Revenue Growth
But back to the bull case for CoreWeave: investors are betting that revenue can scale from $1.9 billion in 2024 to something like $10 billion over the next few years. If they hit that, and assuming something like AWS-style infrastructure margins—say, around 30%—then they might pull in $1–2 billion in net income, even after accounting for interest expenses due to their debt. At that point, the business could be worth $30 to $60 billion. That’s the upside scenario investors are dreaming of—multiples of the current valuation.
What Needs to Go Right for the Bull Case
But again, it’s not guaranteed. You’re betting on the GPU shortage persisting, continued rapid AI adoption, and CoreWeave successfully locking in more multi-year contracts. You're also assuming they don't get disrupted technologically and that TSMC—who manufactures the chips—doesn’t hit any production snags.
Customer Concentration: A Key Red Flag
And there’s another risk: concentration. In 2024, over 60% of their revenue came from Microsoft. That’s a red flag for me. CoreWeave is essentially functioning as overflow capacity for Azure and OpenAI. When Microsoft is maxed out, they tap CoreWeave. But what happens as Microsoft continues building out its own infrastructure? Over time, they may not need to rely on CoreWeave at all.
Why I’m Personally Staying Out
So from my perspective, even though I totally understand the bull case—explosive revenue growth, powering the AI revolution, a huge market opportunity—there are just too many red flags for my personal investment checklist. The customer concentration, high leverage, tech lifecycle risk, and dependency on the GPU supply chain make it a tough one for me.
Final Thoughts: Growth Story vs. Investment Discipline
That said, I hope this overview of CoreWeave has been helpful. If you found value in it, I’d really appreciate a thumbs up and a subscribe.
Disclaimer: I want to make it clear that I am not a financial advisor, and nothing I say is intended to be a recommendation to buy or sell any financial instrument. Additionally, it's important to remember that there are no guarantees or certainties in trading or investing, and you should never invest money that you can't afford to lose.
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