CoreWeave's Spending Gap Spooks Investors After 11% Drop

CoreWeave closed Friday at $71.88, down 11.4% for the session. The drop erased the AI cloud provider's weekly gains and left shares below Monday's close of $73.06.

The timing looks odd. Two days earlier, Alphabet lifted its 2026 capital spending outlook by $15 billion, to as much as $205 billion. On the earnings call, CFO Anat Ashkenazi said the company would "expand the use of third-party capacity in Q3 as a bridging strategy." CoreWeave shares rose in after-hours trading on that comment. They gave it back Thursday, and more on Friday, alongside fellow neocloud Nebius Group, which fell 15% on Friday alone.

The sell-off was not a verdict on demand. It was a verdict on what meeting that demand costs.

Revenue climbed 112% year over year in the first quarter, to $2.08 billion. The revenue backlog stood at $99.4 billion at the end of March. The picture thins as you move down the income statement. Non-GAAP EBITDA came in at $1.16 billion for the quarter, a 56% margin – down from 62% a year earlier. Adjusted operating income, which charges the quarter for depreciation, fell year over year to $21 million from $163 million. On that line, the margin went from 17% to 1%. Management expects it to expand each quarter from here, into low double digits by the fourth quarter.

Management expects capital expenditures of $31 billion to $35 billion this year. CoreWeave's revenue over the past 12 months was about $6.2 billion. That gap may be part of what is spooking investors. The company plans to spend about five times its past year's sales on capacity in 2026. CoreWeave reported $14.9 billion in capital expenditures in all of 2025.

One quarter tells the same story. CoreWeave generated $2.98 billion of operating cash flow during the first quarter and spent $7.7 billion on property and equipment.

Debt helps fill that gap. And the interest on it is climbing fast.

Net interest expense was $264 million in the first quarter of 2025. It reached $388 million in the fourth quarter of 2025, then $536 million in the first quarter of 2026. Management guided for $650 million to $730 million in the second quarter. At that midpoint, CoreWeave's first-half net interest expense this year would nearly match the $1.23 billion it recorded across all of 2025.

Total debt stood near $24.9 billion at the end of March, up from $21.4 billion three months earlier.

The backlog arrives slowly. CoreWeave counted $98.8 billion of it as unsatisfied remaining performance obligations at the end of March, and expects to recognize just 36% within 24 months. The rest stretches as far out as seven years.

"This revenue backlog is near-term weighted, with 36% expected to be recognized in the next 24 months and 75% in the next four years," CFO Nitin Agrawal said on the first-quarter earnings call.

Near-term weighted is one way to put it. The spending happens this year, the interest accrues every quarter, and about two-thirds of that revenue is not due until after March 2028.

Competition is a concern, too. Bloomberg reported on July 1 that Meta Platforms is building a cloud business to sell surplus AI computing capacity to outside customers. Meta also committed $21 billion to CoreWeave earlier this year, so one of the company's biggest customers may be preparing to compete with it.

At about $39 billion, CoreWeave's market value is still about six times its trailing-12-month revenue.

CoreWeave carries an Alpha Score of 19/100, labeled Weak, in the Technology sector. The proprietary metric reflects the gap between the company's growth trajectory and the cost structure required to sustain it.