CoreWeave Earnings: Focus on Debt and AI Spending

Coreweave faces a pivotal test when it releases third-quarter results after the bell on Tuesday.

The market will be watching closely to see what neo-cloud companies say about their spending on artificial intelligence and how they plan to finance their infrastructure builds. The outcome could either calm concerns about debt or stoke further fears.

“Investors need NeoCloud to quantify how much funding is expected to be raised to execute on the existing backlog,” Wolf Research said in a note Monday. “We believe that having the visibility to communicate when and which financing instruments will be used will increase investor confidence.”

Coreweave’s stocks and bonds have come under pressure amid growing concerns about the huge debt the company has taken on to build its data centers.

The company’s stock price has fallen about 40% in the past month. Meanwhile, the yield on a 9.75% corporate bond due in 2031 rose from 15.5% on Tuesday to 16.7% on Thursday as investors digested the election results and possible data center construction hurdles. Bond yields move inversely to prices.

Spreads on the company’s five-year credit default swaps, which provide insurance against default and are considered a barometer of perceived credit risk, are also at distressed levels. CDS spreads were around 1,152 basis points on Tuesday, rising above their October peak and ending Thursday at 1,278 basis points. Rising CDS spreads mean investors are viewing debt as riskier.

Additionally, the New Jersey-based company has a lot of influence. CoreWeave’s debt-to-equity ratio was 702%, up from about 291% a year ago.

CEO Michael Intrater has sought to calm investor fears, posting on LinkedIn after last week’s election that he does not expect “any impact to CoreWeave’s existing customer contracts or related backlog due to changes in the political climate.”

The company reported $104.2 billion in accrued revenue in the second quarter. As of June 30, it had approximately $35 billion in debt.

CoreWeave has already given a full picture of its expectations for the third quarter.

When the company announced its second-quarter results in August, it predicted quarterly sales would be between $3.4 billion and $3.6 billion. It expected capital expenditures for the quarter to be between $11.5 billion and $13.5 billion, and for the full year between $35 billion and $39 billion. The company also expects to have 1.85 gigawatts of active power by the end of the year.

Wells Fargo expects its capital spending needs for the remainder of this year to be mostly covered by remaining outstanding debt, August-September bond issuances and the $12 billion it holds in project costs flowing into capital spending, analyst Michael Tulin said in a note Sunday.

However, with an expected 1.5 gigawatts of added capacity, capital spending could reach $66 billion in 2027, Tulin said. That would require at least $25 billion in additional debt, he noted. Most of that funding could be raised through delayed drawdown loans that allow Coreweave to draw down the funds over time, and the rest could be raised through bonds and convertible notes, he said.

Torino has an “overweight” rating and a $115 price target, implying an upside of 135% from Monday’s closing price.

“Neocloud is at the center of the AI ​​storm, and we remain confident that CRWV is the highest quality company in this space,” Turrin wrote. “Beyond the noise, we can see that the capacity/revolutions are better than expected (1.95GW this year vs. the guide’s 1.85GW) as the margins start to skew.”

But CreditSights analyst Jordan Chalfin said Coreweave’s third-quarter results likely won’t give investors all the answers they’re looking for.

“One of the key issues for CoreWeave is whether they will be able to get all the funding they need,” he said. “They may try to calm the market, but we don’t know how many colors they can or will offer.”

Investors are looking for 2027 guidance on capital spending and free cash flow, which may not be known until Coreweave releases its fourth-quarter results, Chalfin said.

He said Coreweave could alleviate investors’ concerns by showing it has plans and approvals in place to expand capacity through 2027. The company can also demonstrate growth in remaining performance obligations (RPO), which represents the total amount of future revenue contracted, and highlight new customer acquisitions.

Additionally, Chalfin noted that pricing has been very strong in recent transactions. “That could show up in higher operating margins in the third quarter and expectations for the fourth quarter.”

Although CoreWeave faces financial challenges, there are many ways to access capital, Chalfin said. This includes chip-collateralized transactions that allow Corewave to borrow money using GPUs as collateral, as well as providing funding to original equipment manufacturers. For example, CoreWeave looks like this: DellChalfin noted that the company is a major supplier with a strong balance sheet.

“Despite all the market sentiment, the fundamentals are actually very strong and pricing is solid,” he said. “I think the trends in the next few quarters should be supportive.” There could be risks after that, but it’s “too early to tell.”

Some analysts remain skeptical about Coreweave’s ability to allay credit concerns.

Bob Lang, founder and chief strategist at Explosive Options, said the company faces a huge bill in just over two years. Coreweave has approximately $15 billion in principal payments due by 2028, according to its second-quarter income statement.

“They don’t have enough cash to pay off all their debts,” he says. “I think this is the beginning of the end for CoreWeave unless we get a big order, unless we get a lot of money coming in in the next 17, 18 months, unless someone wants to buy it out. But who wants to buy out all that debt?”

However, Lang said the company may have “only” another three to five years to repay its debt, but that will depend on how strong its cash flow is in Tuesday’s report.

Additionally, it will issue shares to fund infrastructure projects such as: meta and oracle He pointed out, as he recently did, that that’s not an option for CoreWeave.

“They will significantly dilute the stock price and the stock price will continue to fall,” he said. “They missed that window when inventory was a few hundred dollars.”

CoreWeave topped $183 in June 2025, but has since fallen over 73% and has recently been trading around $47.

Despite the drop, analysts remain bullish on the stock with an average Overweight rating and a target of $126, based on 39 estimates compiled by FactSet.

—CNBC’s Jordan Nobe contributed reporting.