Key Points
CoreWeave's Q2 earnings release earlier this week didn't do enough to quiet the bears.
The company beat consensus estimates for sales and earnings, but reading between the lines, there are reasons for concern.
The already heavily leveraged company could take on an additional $10 billion in debt by year-end.
Shares of CoreWeave (NASDAQ: CRWV) are falling on Thursday, down 11.4% as of 12:52 p.m. ET. The drop comes as the S&P 500 and Nasdaq Composite were down modestly.
The artificial intelligence (AI)-focused cloud provider's stock continues to slide after releasing its second-quarter earnings earlier this week. Though the company mostly beat Wall Street's targets, it wasn't enough to quell fears that the stock is overvalued.
Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Learn More »
CoreWeave's stock falls for the second day
The company beat analysts' estimates for revenue and earnings, with sales of $1.21 billion for the quarter coming in well above the $1.08 billion consensus target. CoreWeave also shrank its net loss and vastly improved its margins.
CEO Michael Intrator said the report "demonstrates continued momentum across every dimension of our business," and that his company is "scaling rapidly" amid "unprecedented demand for AI."
Still, investors saw reasons to be wary. The company's capital expenditures came in lower than expected for the quarter, and while less money moving out the door might sound like a good thing, as a company in hypergrowth mode, its capex is a good indicator of future revenue growth -- a sort of bellwether of demand.
Image source: Getty Images.
Other analysts pointed to the massive increase in its debt and the cost to service that debt. The company paid $267 million in interest this quarter, up significantly from the $67 million it paid a year before. D.A. Davidson analyst Gil Luria believes CoreWeave will take on a whopping $10 billion of additional debt by the end of the year.
This is a high-risk stock
CoreWeave is heavily leveraged already and will continue to take on huge amounts of debt at steep interest rates in order to meet the "unprecedented demand" for AI. If that demand weakens, CoreWeave would be on the hook and could find itself in hot water.
Should you invest $1,000 in CoreWeave right now?
Before you buy stock in CoreWeave, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and CoreWeave wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $649,544!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,113,059!*
Now, it’s worth noting Stock Advisor’s total average return is 1,062% — a market-crushing outperformance compared to 185% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.
See the 10 stocks »
*Stock Advisor returns as of August 13, 2025
Johnny Rice has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.