Here's what CoreWeave's data-center delay means for the stock

By Christine Ji

Although the stock fell after news of the delay, the company's revenue backlog continues to grow

CoreWeave's revenue backlog grew 85% from the previous quarter.

Although CoreWeave reported impressive growth in revenue and backlog for the latest quarter, its good news was overshadowed by the announcement of a new overhang for the stock: a third-party data-center delay.

Shares of CoreWeave (CRWV) were down more than 10% in Tuesday morning trading after the company cut its full-year revenue guidance and capital-expenditure forecast. On an earnings call, management shared that there had been powered-shell delivery delays associated with the data-center provider.

The delay highlights that CoreWeave and the entire artificial-intelligence category are suffering from capacity constraints, impacting how quickly the company can convert contracted sales into actual revenue.

JPMorgan analyst Mark Murphy said in a Tuesday note that industrywide supply-chain pressures are creating a headwind for CoreWeave, leading him to downgrade the stock to neutral and reduce his price target to $110 from $135.

Due to variables surrounding power and data-center construction, as well as the overall risk associated with CoreWeave's capital-intensive business, Murphy wrote that the stock could be subject to large swings, requiring "a risk tolerance that may not exist for most investors."

Some analysts remained more optimistic on the stock in light of the delay. Jefferies analyst Brent Thill maintained his buy rating but lowered his share-price target to $155 from $180 on Tuesday.

Overall expected revenue from the impacted customer will remain unchanged, and management expects the majority of the delay to be resolved by the first quarter of 2026. The company lowered its full-year capex outlook to between $12 billion and $14 billion, down from $20 billion to $23 billion, but shared that the majority of the original capex planned for the fourth quarter would instead be recognized in the first quarter of next year.

Melius Research analyst Ben Reitzes maintained his $140 share-price target and buy rating in a Tuesday note. While the delay reduces near-term revenue and earnings upside, Reitzes pointed out that revenue backlog is not impacted, and he expects the company's backlog to continue growing at a rapid pace.

"We do expect the coming two quarters of shortfalls to be temporary and new demand can make up for it for full year 2026," Reitzes wrote, pointing to CoreWeave's 85% increase in revenue backlog from the previous quarter.

Reitzes added that large cloud providers and AI labs will continue to demand more computing power into next year, especially as inferencing workloads increase. As a result, Reitzes said he believes CoreWeave will have no issue monetizing any available capacity.

CoreWeave has over 1 gigawatt of contracted power available to be sold to customers, but Thill pointed out that there is "some slack" before it can be converted to revenue backlog, as it could take 12 to 24 months to bring the capacity online.

Stifel analyst Ruben Roy wrote in a note on Monday that CoreWeave's growing revenue backlog points to "substantial revenue growth to come, contingent on power supply deliverance." Although Roy believes the third-quarter revenue backlog has improved CoreWeave's business outlook, he maintained his hold rating and $120 price target due to supply constraints.

On the earnings call, CoreWeave CEO Michael Intrator shared that the company is continuing to diversify data-center providers and pursue self-build efforts to mitigate the impact of infrastructure delays.

"The issue does show that CoreWeave may need to have more control of data center capacity and engineering to make sure this doesn't become an ongoing issue - so it seems likely to vertically integrate more in the future," Reitzes wrote.

Read on: What CoreWeave's new $6.3 billion contract with Nvidia says about the AI trade

-Christine Ji

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

11-11-25 1023ET