CoreWeave’s Stock Sinks as Growth Momentum Shows Cracks Amid AI Infrastructure Challenges

CoreWeave (NASDAQ: CRWV) shares fell roughly 14% in early trading today, deepening a multi‑week slide that has already wiped out about 30% of the company’s market value since late October. The sharp retreat comes despite the cloud infrastructure company delivering stellar third‑quarter results that easily topped expectations. Revenue surged more than 100% year‑over‑year to $1.36 billion, thanks to surging demand from artificial‑intelligence clients. Yet, in today’s market, even strong earnings can’t offset hints that the AI growth story might be slowing—and CoreWeave is learning that lesson firsthand.

Data Center Delays Pressure Guidance

The biggest drag on sentiment is the company’s trimmed full‑year revenue outlook. CoreWeave now expects 2025 revenue in the range of $5.05 billion to $5.15 billion, down from its prior forecast of $5.15 billion to $5.35 billion and below Wall Street’s consensus of roughly $5.29 billion. Chief Executive Officer Michael Intrator attributed the revision to “temporary delays” from a single third‑party data center partner that has fallen behind schedule. These delays are pushing some expected fourth‑quarter revenue into 2026, causing concern among investors who view seamless scaling as critical in the AI infrastructure race.

The company emphasized that the affected customer has extended its contract, ensuring no permanent loss of deal value. Still, any sign of supply‑chain friction is unsettling in a sector where speed and uptime define competitive advantage. Chief Financial Officer Nitin Agrawal clarified that the issue stems from “powered‑shell availability” rather than electrical power shortages. Even so, the hiccup underscores a broader capacity crunch across the AI cloud ecosystem, where everyone from hyperscalers to new entrants is scrambling to secure GPU‑ready facilities.

Margin Compression and Heavy Cash Burn

CoreWeave’s rapid scale‑up carries substantial costs. Adjusted EBITDA soared to $838 million in the third quarter, yet operating margin slipped to 16% from 21% a year earlier. Elevated prices for GPUs, energy, and real estate are eating into profitability, a trend echoing across the industry. The company’s free cash flow turned deeply negative at –$1.59 billion, compared to –$601 million last year. Capital expenditures exploded to $3.28 billion during the quarter, with management projecting $12 billion to $14 billion for all of 2025. Spending in 2026 could potentially double that figure.

While such investment supports long‑term dominance in AI infrastructure, investors are increasingly wary of the cash burn. The volatility surrounding high‑growth tech names has made patience thin, and even well‑positioned players like CoreWeave are being punished for aggressive outlays during uncertain macro conditions.

Merger Fallout and Market Reactions

Adding to the stock’s decline is lingering fallout from the scrapped $9 billion all‑stock merger with Core Scientific (CORZ). That deal, proposed earlier this year, was blocked by CORZ shareholders who challenged the valuation and strategic fit. Intrator called the proposed terms “not appropriate,” but the collapse reignited concerns about CoreWeave’s ability to scale autonomously. Investors now fear higher execution risk, particularly as the firm takes on ambitious construction projects and client commitments without the operational support such a merger might have provided. Shares of Core Scientific are also down today, reflecting ripple effects from the failed tie‑up.

Broader AI Sector Cooling

The correction in CoreWeave mirrors a broader re‑rating of AI‑related names. Nvidia and Palantir have each come under pressure recently, partly triggered by short‑seller commentary from Michael Burry and resurfacing macro risks such as fiscal uncertainty in Washington. Analysts at Piper Sandler cut their rating on CoreWeave to Neutral with a $110 price target, citing “execution risk” and narrowing room for error. After gaining more than 130% year‑to‑date on AI enthusiasm, the stock is now facing a bout of profit‑taking amid doubts that every AI infrastructure player can sustain triple‑digit growth rates indefinitely.

Outlook

Despite the sell‑off, the fundamental story remains compelling. CoreWeave’s backlog has nearly doubled, underpinned by major multiyear deals, including $6.5 billion from OpenAI and $14 billion from Meta. These contracts underscore robust demand for specialized computing environments tailored to AI workloads. Still, in a market pricing perfection, even a single operational delay can trigger sharp corrections.

For investors eyeing a potential entry point, the long‑term case for CoreWeave and AI infrastructure remains intact, but short‑term volatility is likely to persist until new data centers become fully operational. Keeping an eye on capital‑expenditure trends and partnership updates will be key to spotting the eventual rebound signal