CoreWeave coasts to a solid earnings beat, sending its stock higher after-hours

CoreWeave coasts to a solid earnings beat, sending its stock higher after-hours Shares of the artificial intelligence data center firm CoreWeave Inc. jumped more than 14% in extended trading today after it delivered solid financial results that easily beat Wall Street’s projections. The company reported a second-quarter loss before certain costs such as stock compensation of $1.03 per share, well ahead of the analyst consensus estimate of a $1.20-per-share loss. Revenue for the period rose 112% to $2.58 billion, surpassing the Street’s target of $2.56 billion. However, the company’s net loss jumped from $290 million in the same period one year ago to $626 million today. Despite CoreWeave’s mounting losses, investors have a lot of reasons to be optimistic about the company’s future prospects. For one thing, CoreWeave said its revenue backlog now stands at an impressive $104 billion in orders that have been booked but not yet fulfilled. That number excludes around $25 billion in new commitments secured during the current quarter. With respect to guidance, CoreWeave said it’s looking for third-quarter revenue of between $3.4 billion and $3.6 billion, which would imply growth of 158% at the midpoint of that range. Wall Street analysts are looking for total sales of just $3.43 billion. Meanwhile, for the full year, CoreWeave’s management said it now sees adjusted operating income of around $960 million to $1.18 billion on total revenue of $12.4 billion to $13.2 billion. That’s up from an earlier forecast of $900 million to $1.1 billion in adjusted operating income and $12 billion to $13 billion in revenue. In contrast, analysts see CoreWeave delivering just $12.63 billion in full-year sales. CoreWeave also said it ended the quarter with 1.5 gigawatts of active power across its data center facilities, and is targeting more than 1.85 gigawatts by the end of the year. Expanding that capacity will cost some money though, which is why the company also bumped up its capital expenditures forecast from a range of $31 billion to $34 billion to a new target of $35 billion to $39 billion. The 8-year-old company has emerged as a competitor to traditional cloud infrastructure giants such as Amazon Web Services Inc., Microsoft Corp. and Google Cloud, and is racing against those rivals to open more data centers filled with computer chips that power AI workloads. But unlike its main competitors., CoreWeave isn’t remotely profitable. It finished the quarter with a staggering $35 billion in debt on its balance sheet – money borrowed to cover the costs of buying all of those chips and building the facilities needed to house them. Besides its growing debt, CoreWeave also has to deal with the growing opposition to ongoing data center construction across the U.S. In July, New York Governor Kathy Hochul established a moratorium on new large-scale data center projects in the state. CoreWeave Chief Executive Michael Intrator (pictured) told analysts on a conference call that he’s not too concerned about this pressure. “When we talk through the numbers with you guys, we’re basing our progress on where we are today and what we have guided here,” he insisted. “None of those numbers will be impacted by the regulatory pushback as of today.” That said, he admitted that the rising opposition to data centers isn’t exactly helping the company either. “There is no question that when parts of the U.S. become unwilling to even engage in those conversations, that it becomes more challenging,” he told analysts. On the other hand, there was good news for CoreWeave on the business front, with the company seeing favorable trends in terms of renting Nvidia Corp.’s graphics processing units. “Pricing and margins for our BlackWell and Vera Rubin SKUs are setting new highs, while pricing for prior generation SKUs is at or above where it was years ago,” Intrator said. As for the highly publicized rising costs of components such as memory, CoreWeave is dealing with this in the usual way, by passing those increased costs onto its customers, said Chief Financial Officer Nitin Agrawal. Its customers do not appear to have been deterred by those increases. During the quarter, Meta Platforms Inc. announced plans to spend an additional $21 billion on renting AI compute from CoreWeave, while Anthropic PBC struck a multi-year agreement with the company to rent more AI chips. The quantitative trading firm Jane Street Group LLC also committed to spending $6 billion on the company’s compute infrastructure during the quarter. Some investors may be wary about the growing competition CoreWeave is facing, however. It’s not just the public cloud giants, which continue to pour tens of billions of dollars into their AI infrastructure buildouts, that the company has to contend with. During the quarter, SpaceX Corp. said it has started selling its excess compute capacity to third-parties, while Meta revealed that it’s considering launching its own cloud infrastructure business. Agrawal shrugged off this pressure. “Even with this increased competition, we’re seeing demand, pricing and margin expanding, which is a signal for the growth in CoreWeave’s product in an already massive total addressable market that exists,” he insisted. With today’s after-hours surge, CoreWeave’s stock is now up 26% in the year to date, outpacing the broader S&P 500 index, which is up just 13% in the same time frame. Photo: Bloomberg Live/YouTube A message from John Furrier, co-founder of SiliconANGLE: Support our mission to keep content open and free by engaging with theCUBE community. Join theCUBE’s Alumni Trust Network, where technology leaders connect, share intelligence and create opportunities. 15M+ viewers of theCUBE videos, powering conversations across AI, cloud, cybersecurity and more 11.4k+ theCUBE alumni — Connect with more than 11,400 tech and business leaders shaping the future through a unique trusted-based network. Are you AWS customer? Support SiliconANGLE Financially by buying your AWS services from our Marketplace portal page and links. 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