CoreWeave (NASDAQ: CRWV) has shown itself to be an artificial intelligence (AI) player to watch, with its stock soaring nearly 300% from its March initial public offering. So, it's logical for you to wonder if a $10,000 investment in this company backed by AI chip giant Nvidia could make you rich.
This investment, alone, probably won't do the job -- but here's how a position in CoreWeave could help you reach $1 million a decade from now.
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CoreWeave and Nvidia
First, a bit of background on CoreWeave. The company specializes in leasing out access to Nvidia's top AI chips to customers, and this is thanks to its huge investment in these key tools. CoreWeave has built up an offering of more than 250,000 graphics processing units (GPUs) operating across 32 data centers. Users can rent these powerful chips for long periods of time -- or even an hour or two -- allowing them great flexibility. While big cloud service providers offer customers GPUs and a wide variety of cloud services, CoreWeave truly specializes in AI workloads, -and this could make the company the "go to" place for these jobs.
In the latest quarter, CoreWeave said revenue soared more than 400%, so there clearly is demand for its services.
Investors also may like the idea that Nvidia is heavily involved in the CoreWeave story as it holds a 7% stake in this young company. Nvidia has shown itself to be knowledgeable about what's to come in the world of AI, so we could assume that it would only support companies with significant potential for success here.
Of course, it's important to remember that though demand and revenue are skyrocketing at CoreWeave, the company also faces some risks. In order to serve this and future demand, CoreWeave must invest heavily to further expand its fleet of GPUs. All of this increases expenses and pushes it farther from profitability.
Meanwhile, it's true that CoreWeave specializes in AI workloads, and even was the first to make Nvidia's latest system, Blackwell, generally available. Still, some customers of big cloud companies may choose to stick with their services rather than shift to CoreWeave for AI.
Wall Street's expectations for CoreWeave
These factors could weigh on earnings potential and eventually on the stock. Now, speaking of stock price, as mentioned earlier, it's surged since the IPO just a couple of months ago. In fact, Wall Street expects a 47% drop in the stock price within the coming 12 months from today's level.
Now, let's move along to our question: Could a $10,000 investment in CoreWeave today turn into $1 million a decade from now? This would imply a 10,000% increase in the stock from the current price, and though that sounds like a lot, it's been done before. Nvidia soared a mind-boggling 29,000% over the past 10 years. But this level of gains isn't a common occurrence -- and Nvidia represents an extraordinary situation, driving innovation in the earliest days of AI -- so it's not a good idea to expect one stock to deliver such performance.
That said, over the coming decade, CoreWeave could continue to significantly increase revenue amid AI demand, and share performance may follow. So a position in this stock could make up part of your wealth-building portfolio.
The recipe to potentially reach $1 million in 10 years? Invest in a broad selection of quality stocks, including some key growth players like CoreWeave, and hold on. You also might add exchange-traded funds that track a particular index or theme of interest to you, from retail to biotech. This diversification across quality assets increases your chances of turning your investment today into a much larger amount over the coming decade, even potentially reaching the $1 million mark.
Should you invest $1,000 in CoreWeave right now?
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Adria Cimino has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nvidia. The Motley Fool has a disclosure policy.