CoreWeave: A Million Bucks or a Bag of Air?

by

Now, CoreWeave (CRWV +1.30%). A curious little beast, isn’t it? All the Wall Street chaps are flapping their arms about it, claiming it’s sprouted wings and will fly to the moon. It’s certainly had a jolly good start to 2026, leaping about like a frog on a hot stove. But can a mere ten thousand dollars tossed into its pot truly blossom into a million? Let’s have a proper look, shall we?

A hundred times your money. That’s the magic number, isn’t it? A truly enormous ask. It’s like asking a snail to win the Grand Prix. Possible, perhaps, with a very strong tailwind and a distracted field, but terribly unlikely. Let’s not get ahead of ourselves.

A Mountain of Computing Power

CoreWeave, you see, builds these enormous sheds – data centers, they call them – and stuffs them full of these clever little chips called GPUs. Graphics Processing Units. Sounds like something out of a science fiction story, doesn’t it? They rent these chips out to folks who want to train artificial intelligence. A rather important business, this AI, and it requires a monstrous amount of computing power. CoreWeave is essentially a cloud business, but one that’s decided to specialize in this AI business. A sensible enough plan, and one that others have had success with.

Amazon (AMZN +2.12%), Alphabet (GOOG 0.68%) (GOOGL 0.73%), and Microsoft (MSFT +3.45%) have all built themselves rather splendid empires on the back of cloud computing. If CoreWeave can replicate their success on the AI side, it might just be a decent investment. But a hundred times your money? Goodness me, that’s a stretch.

Loading widget...

Currently, CoreWeave is a company worth fifty billion dollars. To become a five trillion dollar giant… well, that’s a bit like trying to fit an elephant into a teacup. It would require Nvidia (NVDA +1.60%), the very company that sells CoreWeave these GPUs, to become unimaginably larger. A rather improbable scenario, wouldn’t you agree? So, let’s shelve that particular dream.

But what if we were a bit more… sensible? What if we aimed for a ten-times return instead? Turning ten thousand dollars into one hundred thousand dollars isn’t quite as glamorous as a million, admittedly, but it’s still a rather pleasing sum. And far more achievable.

A Ten-Times Triumph?

CoreWeave is growing at a rate that’s frankly rather alarming. In the last quarter, their revenue shot up a whopping 134% year over year – a truly monstrous leap. Wall Street expects another surge in the next quarter, and analysts are predicting continued growth of 135% for 2026. It’s hard to imagine many companies growing that quickly at this stage of the AI game, but CoreWeave seems determined to try. They have a backlog of orders worth fifty-six billion dollars – a mountain of work that’s only getting bigger.

However, there’s a rather large fly in the ointment. CoreWeave is spending money like a drunken sailor. They’re building these data centers as fast as they can, but it’s taking a toll on their profits. They seem to be prioritizing growth above all else, which is a risky game. Can they eventually match the business models of the established cloud giants? In the last quarter, Amazon Web Services delivered an operating margin of 35%. Not bad, not bad at all. Google Cloud wasn’t quite as impressive, but still managed a respectable 18%.

Let’s do a little sums, shall we? If CoreWeave can achieve a long-term operating margin of 20%, and investors are willing to pay 30 times those profits, they’d need a market cap of around five hundred billion dollars to achieve that ten-times return. That translates to roughly eighty-three billion dollars in annual revenue. Currently, they’re expecting around twelve billion dollars for the year. A rather significant gap, wouldn’t you say?

A hundred-times return for CoreWeave is, frankly, a bit of a fantasy. Even a ten-times return is a tall order. Amazon Web Services, the largest cloud provider in the world, generated one hundred and twenty-two billion dollars in revenue over the past year. CoreWeave needs to be two-thirds of that size to deliver that ten-times return. Possible? Perhaps. But it’s a long way off.

CoreWeave could be a good stock pick, mind you. But if I were a betting man, I’d put my money on the company that sells CoreWeave those GPUs: Nvidia. They don’t have the same profitability risks, and they’re poised to benefit from the same AI boom. A much safer bet, wouldn’t you agree?

Read More

2026-01-24 02:13