CoreWeave shares surge over 26% on strong earnings, debt retreat; spark rally in battered AI cloud stocks

CoreWeave shares surged more than 26% on Wednesday, fuelling a rally in battered AI cloud stocks after heavy infrastructure spending delivered strong revenue growth and the company signalled a retreat from the borrowing spree that had raised fears of an artificial intelligence bubble, Reuters reported.

CoreWeave shares were trading at $61.61, up $12.88 or 26.43% over the previous close.

The results also helped lift Nvidia, a major CoreWeave backer, by 2%. Nvidia had fallen sharply over the previous two sessions amid uncertainty surrounding CEO Jensen Huang following reports about his relationship with a Chinese businesswoman alleged to have ties to Beijing’s intelligence apparatus.


Shares of other so-called neocloud companies, including Nebius and Iren, also rallied after weeks of pressure. Investors have worried that their debt-funded data-centre expansion could backfire if demand for AI computing weakens.

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“CoreWeave’s earnings directly addressed the fear that’s driven this whole selloff,” said Dan Sheehan, director of portfolio management at Telos Wealth Advisors, according to Reuters. “The neocloud that became the poster child for AI financing worries took real weight off the fear that had been the heart of the selloff.”

Democrats’ sweep of last week’s US midterm elections had further unsettled the industry. Several victorious candidates campaigned for stricter regulation and moratoriums on new data-centre construction, including in Texas, a key market for the sector.

CoreWeave CEO Michael Intrator told Reuters on Tuesday that increased regulatory scrutiny could slow data-centre development across the industry. However, he did not expect it to significantly affect the company’s expansion plans or raise costs.

Intrator said CoreWeave’s planned capacity additions over the next year would remain unaffected.

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The company also said it would avoid unsecured debt markets following a recent surge in borrowing costs. Cash flow from existing contracts would cover repayments on both current and future debt, it added—a financing plan analysts described as credible.

“CoreWeave delivered about the best quarter we could have asked for. Stats were good-to-great, funding concerns were addressed and the strategic moves make sense,” Bernstein analysts led by Madison Rezaei said in a client note.

However, they warned that CoreWeave “will be among the first and hardest hit” once the shortage of AI computing capacity eases.

The risks of mistiming AI investments were evident on Tuesday when SoftBank recorded a $3.7 billion write-down on non-refundable payments for equipment intended to power its US data centres. The charge contributed to a second-quarter net loss of $7 billion, the company’s first in nearly two years.

Uncertainty surrounding Huang has also weighed on the AI sector. The controversy intensified on Tuesday after reports alleged that his relationship helped facilitate billions of dollars in Nvidia chip shipments to China.

Republican US Senator Kevin Cramer, a member of the Senate Banking Committee, called on Huang to step down as Nvidia CEO.

For now, CoreWeave’s results have given AI infrastructure investors some relief. Nebius, Iren, Oracle and Applied Digital climbed between 6% and 14%.

With the exception of Nebius, the stocks had fallen between 32% and 48% this year through Tuesday. Nebius, by contrast, had gained 60%.

Together, the companies—including CoreWeave—were on track to add about $36 billion in market value if the gains held. Nvidia alone was positioned to gain nearly $100 billion.

Nebius is scheduled to report its results before Thursday’s opening bell.

(Disclaimer: This article is based on inputs from agencies. These do not represent the views of The Economic Times)