CoreWeave Earnings: Debt Yield Concerns Overshadow Solid Operating Results

Key Morningstar Metrics for CoreWeave

• Fair Value Estimate: $98
• Morningstar Rating: ★★★★★
• Morningstar Economic Moat Rating: None
• Morningstar Uncertainty Rating: Very High

What We Thought of CoreWeave’s Earnings

CoreWeave’s CRWV third-quarter revenue grew 42% sequentially to $3.6 billion. Adjusted operating margin improved by over 500 basis points to 10.4%. On top of expanding active power capacity to 1.7 GW, the company also secured over $28 billion in backlog this quarter, bringing the total to $132.5 billion.

Why it matters: CoreWeave has enough funding to support future data center builds. With over $20 billion available for near-term deployment, we think recent concerns about the company’s debt yield are overblown. It is on track to reach 3 Gigawatts of active power by 2027.

• As we expected, CoreWeave will not issue new unsecured debt through 2027 as the yield reaches midteens. The company may step up the issuance of new equity or convertible notes at the parent company level, which is more conventional but can dilute existing shareholders.
• At the asset level, the secured credit facilities backed by client contracts remained stable. PitchBook LCD data shows that CoreWeave’s existing delayed draw term loans are trading near par value. The firm is also planning to launch a new investment-grade DDTL with an implied yield below 7.5%.

The bottom line: We reduce our fair value estimate for no-moat CoreWeave to $98 from $108. Our updated fair value reflects the potential dilutive risk from new equity issuances as parent-level debt financing stays unavailable. Strong demand for artificial intelligence infrastructure still supports its growth.

• Shares currently appear deeply undervalued, despite an 8% after-hours rally. We believe debt market movements and the midterm election have led to excessive skepticism that overshadowed its solid operations, creating a buying opportunity for risk-tolerant investors.

Coming up: Management raised full-year guidance on multiple metrics. Revenue guidance was $350 million higher at the midpoint to $13.0 billion-$13.3 billion. Annual recurring revenue expected at the 2026 year-end was also $1.5 billion higher, to $20 billion-$21 billion.