CoreWeave Bets Big on AI: Can Soaring Debt Pose a Financial Risk?

CoreWeave, Inc. CRWV stated that artificial intelligence (AI) is forecasted to have a global economic impact of $20 trillion by 2030, while the total addressable market (TAM) is anticipated to increase to $400 billion by 2028, as mentioned on the last earnings call. The company’s first quarter 2025 results show enormous growth, with revenue jumping 420% year over year to about $981.6 million. A backlog of $25.9 billion (including an $11.2 billion OpenAI deal) and partnerships with IBM and other AI labs underline strong demand.

CoreWeave was the earliest cloud to ship NVIDIA’s H100s and H200s GPUs at scale, the first to deploy GB200 NVL72 racks in production, and in July 2025 became a launch partner for the RTX Pro 6000 Blackwell Server Edition.

However, CoreWeave is still unprofitable and has become highly leveraged. It carried about $18.8 billion in total liabilities after the first quarter, of which $8.7 billion was debt. Interest expense swelled to roughly $264 million in the first quarter as a result. This was attributed to changes in vendor payment terms. Management is using debt to mainly finance rapid expansion (notably new data centers). The company now expects interest expense to remain elevated, at $260-$300 million for the current quarter.

Recently, CoreWeave announced its intention to offer $1.5 billion in senior notes due 2031 through a private placement, subject to market conditions. It subsequently revised and priced the offering at $1.75 billion—an increase of $250 million from the initial plan. CoreWeave plans to use the proceeds for general corporate purposes, including debt repayment and related expenses.

CoreWeave issued $2 billion in new notes in May and followed that just two months later with this $1.75 billion issuance, which indicates that heavy debt can pose financial risks.

The company’s aggressive capital deployment strategy remains a concern. CRWV anticipates capex to be between $20 billion and $23 billion for 2025 due to accelerated investment in the platform to meet customer demand. The company uses a success-based model, entering capex programs only after securing multi-year customer contracts that cover investment costs within the contract terms, helping it to sensibly scale the debt structure.
CoreWeave plans to release second-quarter 2025 financial results after market close on Aug. 12, 2025.

Taking a Look at the Debt Burden of CRWV’s Competitors

Nebius Group N.V. NBIS highlighted on its most recent earnings call that it has no outstanding debt. The company confirms that it holds only an immaterial convertible note. In June 2025, the company announced a private placement of $1 billion in convertible notes to capitalize on the AI-infrastructure boom and drive up revenue opportunities in 2026. It has an ambitious $2 billion capital expenditure plan for 2025. NBIS plans to build a data-center infrastructure pipeline that can offer scalability to more than 1GW of power. With this, NBIS expects significantly higher revenue potential beyond its current guidance.

Microsoft Corporation MSFT maintains a strong balance sheet with manageable debt. As of March 31, 2025, long-term debt (including the current portion) was $39.88 billion. In the third quarter of fiscal 2025, the company’s operating expenses rose 2.4% year over year, while it spent $21.4 billion on capex and $16.7 billion on cash for PP&E. For the fourth quarter, MSFT anticipates operating expenses to increase in the $18-$18.1 billion range. For fiscal 2026, capex is estimated to grow at a slower rate than in fiscal 2025, with a higher share of short-lived assets.

CRWV Price Performance and Estimates

Shares of CoreWeave have gained 210.3% in the past six months compared with the Internet Software industry’s growth of 9.7%.

The Zacks Consensus Estimate for CRWV’s earnings for 2025 has been unchanged over the past 30 days.

CRWV currently carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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