Meet the Monster Stock That Continues to Crush the Market

Key Points

• This artificial intelligence player posted a 400% gain in revenue in the recent quarter.

• This company has close ties to AI giant Nvidia.

• 10 stocks we like better than CoreWeave ›

Monster stocks are often those of companies that have been around for many years, delivering a long track record of revenue growth and boatloads of profit. And they've reached market value into the trillions of dollars. You may think of names like Nvidia or Amazon, with market values of $3.8 trillion and $2.3 trillion, respectively, and they indeed fit the bill.

But a monster stock also can be a newer player that's delivering outsize growth -- and has demonstrated potential to keep this growth going. One in particular is a great example, as it's carved out a key position in the high-growth market of artificial intelligence (AI), and in the first quarter reported a revenue increase of more than 400%. Stock performance has followed, with the shares delivering a mind-boggling 300% gain since their market debut three months ago. That's compared with a 12% increase for the S&P 500. Now, let's meet this monster stock that's crushing the market.

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CoreWeave's role in AI

The stock I'm talking about is CoreWeave (NASDAQ: CRWV), a company that is helping AI customers with something they need most right now, and that's access to high-performance computing. In fact, that's CoreWeave's main business. This cloud player has invested in 250,000 graphics processing units (GPUs) across more than 30 data centers and offers customers the possibility to rent the computing they need for any period of time, even for just an hour.

CoreWeave competes with big cloud service providers, but this smaller player has carved out a spot because it specializes in AI workloads. The company says its platform results in more uptime for customers. By generating more computing cycles, CoreWeave reduces the time required to train models, and as a result, customers can advance their projects more quickly. Customers see speed as a priority, often making the difference between a victory and a loss, so it's no surprise they've flocked to CoreWeave.

As mentioned, that's helped the company report a triple-digit revenue gain in the recent quarter. And considering the AI buildout continues, with the AI market on track to reach into the trillions of dollars, this positive momentum also may continue.

Another reason customers are rushing to CoreWeave is the company doesn't offer access to just any chip. It offers access to the world's top-performing GPUs, designed by market leader Nvidia. In fact, CoreWeave was the first cloud provider to make Nvidia's Blackwell architecture and chip generally available to customers back in February, and it just recently became the first to do the same with Blackwell Ultra, the very latest Nvidia GPUs. Nvidia also is a supporter of CoreWeave, holding a 7% stake in the company. Investors like this, considering AI expert Nvidia probably would invest in the most promising AI players.

Will the stock continue to gain?

All of this has played a role in CoreWeave's strong performance since its market launch. Now the question is: Will this stock continue to excel? It's true that CoreWeave has delivered outstanding gains, and though the future looks bright, the company still faces challenges. Big cloud providers have tremendous resources, and many of their customers may choose to stick with them for AI rather than try a young player like CoreWeave. So CoreWeave must continue to shape its service so that it truly stands out to maintain a share of the market.

As part of this process, CoreWeave must heavily invest in GPUs on an ongoing basis to meet current demand and attract new customers -- and this may make it difficult for the company to reach profitability anytime soon. Some investors, concerned about the heavy investment and lack of profitability, might choose not to invest and instead opt for a more established cloud company.

Of course, it's impossible to predict with 100% accuracy which direction this high-growth stock will take. CoreWeave does carry some risk, because of the challenges I just mentioned, and that could lead to lackluster performance or even a significant decline. So it's not the right choice for every investor.

But investors who don't mind some uncertainty may decide to pick up a few shares of CoreWeave because the company's relationship with Nvidia and expertise in AI workloads may fuel the already positive momentum -- and potentially this monster stock could continue to crush the market.

Should you invest $1,000 in CoreWeave right now?

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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Adria Cimino has positions in Amazon. The Motley Fool has positions in and recommends Amazon and Nvidia. The Motley Fool has a disclosure policy.