330% Returns YTD: Is CoreWeave's Momentum Softening?

Key Points

• CoreWeave's 330% rally in under three months since its March IPO may signal the company's quick ascent as a go-to AI hyperscaler.
• Stellar revenue growth, ambitious new deals with multiple partners, and an impressive revenue backlog are all significant points in CoreWeave's favor.
• On the other hand, the company is heavily reliant on debt, sky-high demand for AI and related services, and a few big-name customers to continue to grow.

CoreWeave Inc. NASDAQ: CRWV is among the top-performing stocks for 2025, despite completing its IPO only in late March of this year. With a year-to-date return of an incredible 330%, the company has rapidly become a go-to name for artificial intelligence infrastructure, cloud computing, and machine learning projects more broadly.

A huge part of CoreWeave's success is likely due to its close partnership with chip giant NVIDIA Corp. NASDAQ: NVDA. The latter firm not only owns a significant stake in CoreWeave, but it supplies the younger company with valuable hardware that CoreWeave utilizes in its data centers, which it then sells access to for other businesses looking for the computational power necessary to fuel AI companies and machine learning programs alike.

CoreWeave is essentially a textbook definition of a momentum play based on its impressive rally in its first months of public trading. But how long can the company keep this rally going?

Should investors buy in now with the hope that the share price can continue to soar, or is it better to hold off and watch for a reversal of the trend?

Major Gains for CoreWeave on Turbocharged Revenue Growth, Applied Digital Deal, Among Other Factors

CoreWeave shares have more than quadrupled from the price of the IPO amid a series of announcements that have each pushed the stock higher. Most recently, both a stellar earnings report and the news of a major partnership with digital infrastructure firm Applied Digital Corp. NASDAQ: APLD may have contributed to the price of CRWV doubling in the last month.

Looking closely at the first earnings report since going public, CoreWeave's revenue trajectory seems stellar: the company reported top-line results 420% above those for the prior-year quarter. Revenue came in just under $1 billion for the quarter, even as net losses more than doubled while expenses mounted.

Investors were perhaps even more excited by CoreWeave's announcement of a revenue backlog of $25.9 billion and the company's increased full-year revenue guidance of between $4.9 billion and $5.1 billion.

CoreWeave's early-June announcement of its long-term agreement with Applied Digital also boosted shares. The 15-year deal will secure 250 MW of AI datacenter capacity for CoreWeave and is expected to generate roughly $7 billion in revenue. While this deal would seem to be a boon for Applied Digital in particular, it is also a reflection of CoreWeave's surging demand and the expectations of future growth for the AI hyperscaler.

Demand, Debt, and Limited Customer Base Are All Threats

On the other hand, it is understandable why investors might be cautious about buying into the CoreWeave hype despite its banner performance so far this year. First, the company leans heavily on demand for NVIDIA's products and for the AI space in general. If either of those two elements should dampen, whether due to competition from other GPU makers, regulatory changes to the AI space, or technological developments that shift interest elsewhere, CoreWeave has little to fall back on.

Another significant risk is the company's debt, which totals a whopping $12 billion. Essentially, CoreWeave takes out expensive loans to finance its huge array of GPUs, which it then rents out to customers. Bullish investors may argue that the high volume of debt is necessary to allow CoreWeave to outpace the growth of its competitors at this early stage.

However, the high cost of these loans is evident even from the results of the first quarter following the IPO: CoreWeave paid about $263 million in interest alone for the quarter, suggesting that annual interest payments could be over $1 billion.

CoreWeave has signed major deals with firms like Microsoft Corp. NASDAQ: MSFT and OpenAI that should provide a billion in funds, helping to fuel the massive spending needed to continue CoreWeave's rapid growth.

Still, relying on a small number of customers is inherently risky, as the loss of even one major contract could fundamentally undercut CoreWeave's current model, as dependent as it is on a significant influx of cash.

Investors will have to decide for themselves whether the hype surrounding CoreWeave justifies an investment after 330% returns in under three months or if the risks outweigh the potential benefits for the time being.