CoreWeave just reported strong second-quarter results. Here’s what Wall Street is saying
CoreWeave delivered a second-quarter report that left even bearish analysts on the stock impressed. The cloud computing company posted an adjusted loss of $1.03 per share for the second quarter versus the $1.20 loss expected by analysts polled by LSEG. Revenue came in at $2.58 billion for the same period, marking a 112% increase on a year-over-year basis and exceeding the Street’s $2.56 billion consensus estimate. The company noted that it has revenue backlog of $104 billion, excluding an additional more than $25 billion worth of commitments made in the current quarter. In addition, active power capacity across its data centers stood at 1.5 gigawatts by the end of the three-month period ended June 30. CoreWeave also issued better-than-expected guidance for the year. The print catapulted its shares more than 18% higher in premarket trading Wednesday. It also led analysts at JPMorgan, Bernstein and other shops to increase their price targets on the stock, while others reiterated more bullish forecasts for the company. Additionally, analysts underscored CoreWeave’s improving margins as well as its growing customer commitments, though the Street remains split on how shares will perform going forward. Wednesday’s gains could help offset the stock’s recent losses. Over the past three months, CoreWeave has shed 16% due to concerns about the sustainability of its business model, particularly given its rising debt load. Shares also sank after Meta said last month that it would sell its leftover artificial intelligence computing capacity to third-party developers — a move that would put it in more direct competition with CoreWeave. Here’s what Wall Street analysts are saying about the cloud computing name. Deutsche Bank: Buy, $150 price target “CoreWeave delivered 2Q results that continue to demonstrate strong execution, expanding backlog, broadening customer mix and green shoots on profitability as they effectively convert backlog and scale revenue. The company appears to be tracking ahead of planned ramping capacity. … They also continue to lay the foundation for future growth, adding $5bn in revenue backlog in the quarter (plus > $25bn in early 3Q) while expanding total contracted power to 4.2GW as of early Aug., up from 3.5GW prior.” JPMorgan: Neutral, $120 Analyst Samik Chatterjee raised his price target from $110. “CoreWeave results delivered on the key metric investors were focused on, margin performance, to gain confidence in relation to the strong demand backdrop not only being accretive to revenue and RPO but also to the bottom-line for AI infrastructure builders, including CoreWeave. Even though margins were a big watchpoint from the perspective of the quarterly results, we believe the positives from the result and earnings call commentary pertained more to long-term outlook for the business.” Citi: Buy, $142 “Against high anxiety for the neoclouds, Coreweave delivered a confident message in Q2. The quarter demonstrated AI demand remains robust, strengthening pricing power (25% increases across SKUs), growing software/token business, and upside surprises on margins. Although there were some concerns on higher interest from their recent DDTL facility, its tied to shorter duration contracts which have stronger pricing and profitability.” Bernstein: Underperform, $74 Analyst Madison Rezaei raised her price target from $67. “Credit where credit is due: this was the strongest print CRWV has delivered. We’ve previously written about how this team has fallen down on execution, but in this quarter, they delivered. Backlog grew to ~$129B (inclusive of the $25B signed in early Q3), active power increased substantially (500MW added last quarter), contracted power is continuing apace (3.7GW), and the customer base is slowly broadening, with some minor decreases to average contract duration. We even like the Indonesia build plan. Is it enough to make us dream the neocloud dream? Unfortunately not.” Barclays: Equal weight, $90 “CoreWeave reported healthy Q2 results (see difference table below). After last quarter, there was a lot of focus on operating leverage and here, the company saw a significant jump, and we expect more to come with more capacity becoming operational in the coming quarters.” Bank of America: Buy, $140 “We expect margins to improve sequentially to 6.6% in 3Q and 14.6% in 4Q as recently activated capacity ramps and converts backlog into revenue. Contracts signed during 2Q carried contribution margins 5-1pts above those signed in previous quarters, and a ~25% price increase took effect in July, driven by scarce capacity and increasing customer ROI as inferencing proliferates. We believe these improved contract economics, as well as margin-accretive ancillary businesses and shorter-duration enterprise contracts, support a margin profile above 25-30% [operating margin].” Morgan Stanley: Equal weight, $99 “All in, a solid performance across the board with demand commentary, net new commitments, and pricing dynamics all positive. Overall, we see these well-reflected in the after-hours move and stay EW as we remain more measured on the LT returns / execution. We are currently reviewing our estimates.” Wells Fargo: Overweight, $160 Analyst Michael Turrin raised his price target from $155. “Margin story coming into focus as CRWV highlights 2Q contrib margins landing in 30-35% range (vs mid-20s prior), price increases (more than just cost inflation passthru) & shift to (some) shorter-duration/higher-monetization deals.”
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