An unlimited information heart in Plano, Texas, is an emblem of the large AI infrastructure growth that has boosted inventory markets and pushed U.S. financial progress over the previous yr. The information heart occupies greater than 450,000 sq. toes and price $1.6 billion to assemble and equip. It provides 30 megawatts of computing energy to coach and run AI fashions. But the corporate that runs it’s a main candidate to be ground-zero for a future AI monetary meltdown.
The information heart is one in all dozens around the globe operated by CoreWeave, an organization that develops and manages information facilities and sells their computing capability to expertise corporations. Its enterprise is on the heart of the AI financial system—offering computing energy to satisfy the voracious demand of the likes of Microsoft and OpenAI. However CoreWeave doesn’t personal the Plano facility, nor does it personal a lot of the information hubs it’s working. And that is part of the issue.
The corporate is constructed, by its personal admission, on a mountain of debt—obligations it has piled up because it races to construct out a community of server farms for its clients. And that mountain looms far bigger than the piles of money that CoreWeave has introduced within the door thus far. When the corporate declares earnings on Monday, bulls and bears alike might be watching to see how its income is rising, and whether or not it has been capable of pare its losses. CoreWeave’s earnings are more likely to be a bellwether for the state of the complete AI growth, and for the business’s huge and costly infrastructure buildout particularly.
CoreWeave has $7.6 billion in present liabilities—payments that fall due inside 12 months—on its stability sheet, and $11 billion in debt total, in accordance with its most up-to-date quarterly earnings report, filed in August. Coming from a tech big like Google or Microsoft with tens of billions in free money circulation, such numbers wouldn’t elevate an eyebrow. However CoreWeave’s revenues have been solely $1.9 billion in 2024. On its Q2 earnings name, CEO Michael Intrator advised analysts that full yr 2025 income would land between $5.15 billion to $5.35 billion. On the identical name, the CEO stated he anticipated CoreWeave’s capex for the yr would complete between $20 billion and $23 billion.
These short-term figures pale beside a much bigger and probably extra onerous obligation that isn’t on its stability sheet: the $34 billion in scheduled lease funds that may begin kicking in between now and 2028. A lot of these funds are stretched over comparatively lengthy phrases, of 10 years or extra. Nonetheless, a few of that is for information facilities and workplace buildings that haven’t but begun to function or herald income—representing a vulnerability if any of the as-yet-unprofitable startups CoreWeave sells computing companies to are unable to satisfy their contractual obligations, or if building delays imply CoreWeave will not be capable of present capability on time, permitting clients to cancel contracts.
In a way, Coreweave is a metaphor for the broader AI business at the moment second, as prime corporations decide to huge capex spending right now within the confidence that it’ll be justified by future income from AI platforms and companies. Buyers look like broadly satisfied by the corporate’s narrative: CoreWeave’s inventory value is up 160% because the firm’s IPO in March.
However Fortune’s evaluation of CoreWeave’s filings with the Securities and Alternate Fee, that are laced with warnings and caveats, present how dangerous the corporate’s enterprise mannequin could possibly be. In interviews with a number of analysts, bulls and bears agreed that CoreWeave’s fundamentals, as mirrored in its filings, don’t at the moment add up. “A lot has to go right,” says Thomas Blakely, a managing director of software program fairness analysis at Cantor Fitzgerald, who charges CoreWeave “overweight.” (Of 26 fairness analysts who at the moment cowl the inventory, 14 had the equal of purchase or outperform scores on the shares, whereas 9 had “hold” scores, and three had “underperform” or “sell” suggestions, in accordance with information from S&P Market Intelligence.)
The bears see CoreWeave as a powerful candidate to seek out itself underwater with its mounting liabilities, making it probably the primary domino to fall within the AI ecosystem. “To say they’ll scale out of this is questionable,” says Gil Luria, the top of expertise analysis on the funding agency D.A. Davidson. “I don’t see how it becomes more profitable.” He believes that the likeliest final result for CoreWeave on a five-year time horizon is chapter—both as a result of its present clients will be capable of depend on their very own infrastructure by then, or as a result of an more and more stretched CoreWeave will now not be capable of borrow.
In an announcement to Fortune, an organization spokesperson stated that “CoreWeave’s capital structure and financial performance are strong and underpinned by long-term take-or-pay contracts signed with the world’s leading enterprises and AI labs who partner with CoreWeave because we deliver the best AI cloud.” The assertion went on to say that the corporate structured its contracts to “support and repay any related debt obligations while generating additional free cash flow. CoreWeave operates in a supply-constrained market where demand far exceeds capacity, and our hyper-growth is evidence of the trust leading companies place in us to power their most critical AI workloads.”
Betting massive on tomorrow’s income
With the corporate persevering with to make enormous new spending commitments even because it books new future income, AI buyers’ consideration might be glued to its upcoming quarterly earnings report. One quantity that everybody might be watching is CoreWeave’s “remaining performance obligations,” or RPOs—basically revenues that CoreWeave has booked however that haven’t but been paid. (Like its scheduled lease funds, CoreWeave’s RPOs are excluded from its stability sheet.)
If CoreWeave is reserving the sorts of contracts that may pull it out of debt sooner slightly than later, the RPOs degree—and the forecast for a way rapidly these future bookings are more likely to flip into precise money—are the place they might present up. The corporate has introduced a number of main new offers since its final quarterly earnings announcement, together with a $14.2 billion settlement to provide Meta with computing capability, and an pact with AI startup Poolside for a knowledge heart full of 40,000 Nvidia GPUs. So it’s probably its RPO complete will climb considerably. Wall Avenue analysts’ forecasts for the corporate’s 2026 income vary from $10.9 billion to $14.9 billion, in accordance with information compiled by LSEG.
Bulls argue that that is precisely how the growth will play out in CoreWeave’s favor: The income will come via, in nice amount, and its scale will clear up the corporate’s issues by catching up with after which outpacing its capital expenditures. In that situation, the corporate turns into the subsequent Levi Strauss or Amazon Internet Providers, offering the “picks and shovels” of the AI growth, and getting filthy wealthy. “The potential is beyond the scope of our imagination at this point,” says Kevin Dede, a senior expertise analyst on the monetary companies agency H.C. Wainwright, which charges CoreWeave a “buy.”
However for now CoreWeave is miles away from being worthwhile and is bleeding money, absent its capacity to challenge debt. The RPOs it reported in its most up-to-date earnings which can be more likely to be realized within the subsequent 12 months should not, on their very own, ample to cowl its present obligations and introduced progress plans (extra on that shortly). The corporate has razor-thin working margins—1.6% prior to now quarter. After accounting for its giant curiosity bills, these margins flip sharply detrimental. The corporate misplaced greater than $600 million on $2.2 billion in income within the first six months of 2025. “That’s not great,” Luria says. “Is there any way that gap closes?”
Barring an unlimited surge in income over the subsequent 12 months or so, the corporate will probably have to borrow extra money, or renegotiate with collectors, as a way to cowl the obligations already on its books. To make sure, the AI growth may ship that income surge—however even slight weakening in spending progress throughout the business may hit CoreWeave disproportionately. Kerrisdale Capital, an funding administration agency that’s shorting the inventory, is pithy in its conclusions: CoreWeave, it wrote in a September report, is “the poster child of the AI infrastructure bubble.”
A pivot to AI, fueled by debt
CoreWeave started as a crypto-mining firm, a aspect venture of some mates who have been hedge-fund merchants. Crypto mining, like AI, depends closely on graphic processing items, or GPUs, with the chips racing to unravel difficult algorithms that spit out foreign money rewards for accurately verifying blockchain transactions, and CoreWeave was a gentle purchaser.
Over time, Brian Venturo, one of many firm’s founders, realized that the rise in AI could be a significant component fueling the surge in demand for the computing energy of the GPUs that CoreWeave was already accumulating. Starting in October 2021, CoreWeave entered into two offers with asset administration agency Magnetar Capital, elevating first $50 million in convertible notes, after which a yr later, an extra $125 million, additionally in convertible notes. The corporate used practically all of it to purchase GPUs from Nvidia. Over the subsequent few years, CoreWeave would safe billions of {dollars} in a mix of debt and fairness, constructing out a sprawling array of information facilities throughout the U.S., and ultimately increasing to the U.Ok.
This March, CoreWeave’s IPO made it one of many closest issues to a pure-play AI firm to debut on public markets. Initially, fears in regards to the firm’s debt load restrained its inventory’s efficiency. However its shares took off in Could after it reported its first quarterly earnings, together with hovering income progress of 420% quarter-on-quarter. Whereas the worth has declined since a peak in June, CoreWeave shares closed on Friday at $104, up from a debut of $40.
However as Luria places it, the bear case for CoreWeave is simple arithmetic. The corporate’s enterprise mannequin is to borrow capital after which use that capital to construct information facilities crammed with GPUs after which promote time on these GPUs to AI corporations. “The question is, are they getting a sufficient return … on their investment to justify the interest they’re paying on their debt?” Luria says.
Its most up-to-date filings present how hefty that debt has change into. The issue isn’t simply the quantity of CoreWeave’s debt. It’s the construction—most of it’s dearer than common for company debt, and far of it comes due within the subsequent 9 months. Of CoreWeave’s present liabilities, $3.6 billion is debt payable by June 30, 2026, simply a part of $11 billion in total debt the corporate carries on its stability sheet. A lot of that debt carries hefty rates of interest of between 9% and 15%, in accordance with the monetary statements, with 11% being the weighted common price total. (This fall, charges on newly issued investment-grade company debt have hovered between 5.5% and 6%, in accordance with Moody’s. The speed at which CoreWeave is ready to borrow has come down over time, with most of its newer debt issued at nearer to 9%. )
Nearly all of CoreWeave’s excellent debt, its statements present, is within the type of two loans, referred to as Delayed Draw Time period Mortgage (DDTL)1.0 and DDTL 2.0. There’s $1.8 billion excellent on the DDTL 1.0, at a 15% rate of interest, and $5 billion in DDTL 2.0, at an 11% rate of interest. The corporate has begun cost on DDTL 1.0; quarterly principal funds on DDTL 2.0 are due starting in January 2026. (The rates of interest on each these loans are floating.)
That is the place the corporate’s RPOs are available in. CoreWeave says that as of June 30 it had a bit of over $30 billion, the vast majority of which ought to flip into precise gross sales over the subsequent 4 years. The corporate says 50% of that quantity, or $15 billion, might be acknowledged within the subsequent two years. Assuming half of that may in flip be acknowledged within the subsequent yr, meaning the corporate ought to have $7.5 billion coming in. But when its working margins stay at simply 1.6%, the corporate will solely generate $120 million in revenue from this $7.5 billion—not sufficient to cowl its curiosity bills or make the principal repayments on its debt. That means that CoreWeave’s returns stay far under the price of its capital.
Larger RPOs, in fact, would imply extra income for CoreWeave subsequent yr. That stated, there are additionally much more capital bills to come back. CoreWeave continues to spend closely to buy Nvidia GPUs—which make up the good majority of its capital expenditures—and different gear to outfit its information facilities. Within the first half of 2025, for instance, it invested $4.7 billion in property, plant and gear whereas bringing in solely $2.2 billion in income. The report from Kerrisdale cites comparable considerations as Luria in justifying its quick place. CoreWeave is “a debt-fueled GPU rental business with no moat, dressed up as innovation,” the agency writes, arguing that the inventory faces a 90% draw back.
Can CoreWeave rely on its clients?
Luria and Kerrisdale each cite CoreWeave’s extremely concentrated buyer base as one other potential peril—a actuality that CoreWeave itself acknowledged in its final earnings report. “A substantial portion of our revenue is driven by a limited number of our customers, and the loss of, or a significant reduction in, spend from one or a few of our top customers would adversely affect our business,” the corporate wrote. Most notably: Within the second quarter of 2025, an eye-popping 71% of CoreWeave’s income got here from Microsoft alone.
To make sure, Microsoft has a greater credit standing than many international locations, together with the USA, and is unlikely to renege on its contract with CoreWeave. And CoreWeave’s contracts with its lessees usually require them to pay to the ends of their leases even when they don’t wind up using them, besides in case of “nonperformance.”
A lot of CoreWeave’s utility has come from providing available compute as these corporations raced to scale up their very own operations. However with Microsoft set to spend tens of billions of {dollars} on growing its personal information facilities, it might not want CoreWeave’s companies sooner or later. “They will pay their obligations, but the likelihood of them renewing at the end of the contract is much less guaranteed,” Luria says.
CoreWeave’s different main buyer, OpenAI, is one other matter. In March, CoreWeave entered an settlement with Sam Altman’s AI big, with OpenAI dedicated to paying $11.9 billion via October 2030, with a $4 billion growth introduced in Could. However OpenAI itself has made commitments far past its present money circulation—together with commitments within the many tons of of billions to Oracle, Nvidia and different information heart suppliers.
If OpenAI runs into any monetary troubles, Luria says, CoreWeave probably wouldn’t be first to obtain funds, in comparison with a lot bigger OpenAI companions like Microsoft, Amazon, and even Oracle. (That’s additionally the case for among the different, smaller venture-backed and loss-making AI startups CoreWeave serves, resembling poolside, Cohere, and Mistral.) To depend on CoreWeave’s ties to OpenAI, he says, “You have to believe that OpenAI is going to be unbelievably successful, so much so that it can pay everybody that’s ahead in line.”
All eyes on earnings
All of this implies there’ll be lots at stake when CoreWeave reviews earnings on Monday. The corporate may also be digesting a latest setback: In late October, the shareholders of Core Scientific, a crypto miner with a hoard of computing sources that CoreWeave coveted, rejected CoreWeave’s $9 billion all-stock acquisition supply. (CoreWeave will console itself with a $270 million breakup payment—an quantity that may assist it cowl the $360 million it’s anticipated to pay Core Scientific to lease information heart capability from it subsequent yr. Total, CoreWeave is on the hook to pay Core Scientific some $10 billion in future lease funds over the subsequent 12 years, which can have been one purpose CoreWeave was wanting to attempt to use its highly-valued shares to buy Core Scientific in an all-equity deal valued at $9 billion when the supply was initially made.)
The argument for CoreWeave’s success is simply so simple as the maths in opposition to it: AI goes to characterize a transformational shift within the world financial system, and CoreWeave is powering the expertise’s progress. As the event of AI accelerates, so will the demand for computing energy from corporations apart from the hyperscalers, all hungry for the companies of suppliers like CoreWeave. What’s extra, right now’s collectors could also be keen to attend a bit of longer for that demand to materialize: The lenders behind DDTL 2.0 not too long ago renegotiated the phrases of the mortgage to delay the beginning of principal funds.
Blakely, at Cantor Fitzgerald, says that CoreWeave is already diversifying its buyer base, noting the latest take care of Meta. “It’s a growth business,” he says, in reference to CoreWeave’s capital expenditures. “If business is growing, you have to invest against it.” He and different bulls see a future the place the corporate is now not laden with debt. As soon as CoreWeave sheds its liabilities over the subsequent 5 years, Blakely says, a rising % of its income can start coming from infrastructure that’s already paid off, boosting CoreWeave’s margins. Furthermore, Blakely says that new fashions of chips may run extra effectively or be capable of fetch the next premium from clients, permitting CoreWeave to carry extra pricing energy.
Blakely says that these $30.1 billion in RPOs—the income that has been booked however not but delivered—are more likely to improve meaningfully in CoreWeave’s subsequent earnings, primarily based on not too long ago introduced agreements. However the quantity to observe is likely to be the extra obligations in borrowing that the corporate will tackle to service them: If these obligations scale up alongside the booked income, bears say, CoreWeave nonetheless dangers operating out of money except it takes on but extra debt, raises extra fairness, or will get current collectors to increase phrases.
Blakely acknowledges {that a} sustainable path ahead for CoreWeave is perilous. “A lot has to go right,” he says. Nonetheless, he compares the present second in AI to the start of the smartphone period, the place analysts doubted Apple’s claims that it might remodel world communication. “CoreWeave is a leader there in terms of this market,” Blakely says. “If they can maintain that lead … they will be able to participate in the spoils.”
CORRECTION: An earlier model of this story said incorrectly that Coreweave’s quarterly principal funds for DDTL 1.0 would start in January 2026; these funds have already begun.
This text was up to date so as to add a spread of analysts’ projections for CoreWeave’s 2026 income.
