CoreWeave Earnings: Diversified Customer Base and Software Traction Strengthen Fundamentals

Key Morningstar Metrics for CoreWeave

• Fair Value Estimate
  : $115.00
• Morningstar Rating
  : ★★★★
• Morningstar Economic Moat Rating
  : None
• Morningstar Uncertainty Rating
  : Very High

What We Thought of CoreWeave’s Earnings

CoreWeave’s CRWV revenue expanded 24% sequentially to $2.6 billion in the second quarter. Quarterly power capacity addition of 500 megawatts brought total active power to over 1.5 gigawatts. Revenue backlog grew 56% sequentially to $104 billion, not including the $25 billion added in the third quarter.

Why it matters: CoreWeave’s healthy customer diversification underpins our thesis that enterprise artificial intelligence cloud adoption will help the company rapidly scale revenue. We see CoreWeave adding industrials and healthcare companies as new customers while expanding its bookings with AI natives.

• Software-driven services also became a key growth contributor, with managed inference hitting the $100 million annual recurring revenue benchmark a few months after launch. More exposure to managed services can support better margins for CoreWeave over the long term.
• Second-quarter adjusted operating margin of 5% was in line with expectations, and management expects quarterly adjusted operating margin to hit the low teens by year-end. CoreWeave is making progress to reach our midcycle adjusted operating margin forecast of above 20% around 2030.

The bottom line: We lift our fair value estimate for no-moat CoreWeave to $115 per share from $106. Shares look fairly valued following the 15% rally in after-hours trading.

• Better customer diversity and positive managed software traction both point to stronger fundamentals for CoreWeave. In addition, the firm raised more than $10 billion of financing in the second quarter, bringing the year-to-date total to over $30 billion.
• Strong market demand and a stable financing pipeline should allow CoreWeave to reach its capacity goal of 1.85 GW by the end of 2026 and 3.00 GW by the end of 2027.

Between the lines: CoreWeave’s partnership with Nvidia remains solid. The company completed the industry’s first validation of Vera Rubin NVL72 racks and is likely to launch Vera Rubin chips ahead of competitors.