"CoreWeave ( NASDAQ:CRWV ) stock has lost over half of its value since peaking at $187 per share last June amid doubts about its high valuation and concerns over artificial intelligence (AI) growth slowing. Investors worried about the sustainability of AI demand, with the company's market cap dropping to under $45 billion today. Critics also pointed to the circular nature of deals with Nvidia ( NASDAQ:NVDA ) and OpenAI, suggesting they artificially propped up revenues."
"However, CEO Michael Intrator appeared on the Big Technology podcast and pushed back against these views. He called claims of circular financing with Nvidia "ridiculous" and noted Nvidia's stake is too small to support CoreWeave's operations. The stock surged more than 12% yesterday, closing at $89.93 per share. With management's full-throated defense of its business and the stock's rebound, is CoreWeave now a buy again?."
"Critics have raised valid points about CoreWeave's arrangements with Nvidia. Nvidia invested roughly $300 million in CoreWeave across two rounds before its March 2025 IPO, acquiring a 7% stake with 24.2 million shares. Beyond that, a $6.3 billion deal commits Nvidia to purchase any unsold cloud computing capacity from CoreWeave through April 2032. Such agreements create a financial loop: Nvidia buys capacity, CoreWeave builds data centers using Nvidia chips, and this supports deals with clients like OpenAI."
CoreWeave shares plunged from a $187 peak to under $90 as market cap fell below $45 billion amid doubts about sustained AI demand and high valuation. Nvidia invested roughly $300 million for a 7% stake and agreed to buy unsold CoreWeave capacity under a $6.3 billion commitment through April 2032. Critics warn such arrangements create a circular revenue loop and mask true end-user demand. Estimated cash burn reached about $19 billion, and 2024 net losses widened to $863 million despite revenue tripling. Short-seller concerns include faster GPU depreciation as newer chips arrive. Management denied circular financing and cited Nvidia's stake as too small to prop operations.
Read at 24/7 Wall St.
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