CoreWeave’s Forecast Is Key to Stopping Another Earnings Selloff

CoreWeave Inc. shares have been on a roll lately after a monthslong slump. Now, the neocloud provider’s earnings after the close Tuesday can give investors a sense of whether the rally is sustainable.

The problem is, quarterly results tend to bring out the worst in the stock, which has fallen after each of the company’s last five earnings reports, according to data compiled by Bloomberg.

“It almost doesn’t matter what they say on their earnings,” said Willy Lee, principal at venture firm Neostellar, which has held shares of CoreWeave since before its initial public offering. “The market’s still I think locked in on pieces of their earnings where I’m not sure if people fully understand parts of the story, and I think it’s just taken time for people to digest.”

It’s been a rocky ride in the stock market for CoreWeave, which rents cloud-computing power for artificial intelligence, since going public in March 2025. The shares have been whip-lashed by the expiration of early investor lockups and shifting sentiment surrounding AI. They more than tripled in their first few months of trading, gave back a good chunk of that gain over the next few months, and have flipped between periods of steep gains and sharp losses ever since.

Through it all, the stock is up 120% since the IPO and 23% this year. However it’s still down 41% from the all-time high it hit almost exactly a year ago.

The latest downturn started in May after the company’s first-quarter earnings report featured a disappointing forecast that sparked concerns about slowing growth. The stock plunged 56% from a high in May to a low in July. But it has recovered almost half that loss, with a 21% jump in a single session after CoreWeave and Leidos Holdings Inc. announced they were developing AI cloud services for US defense and intelligence operations, followed by last week’s 26% gain, its best performance in over a year.

After all that, the company’s earnings will offer a clearer view of where CoreWeave stands at this critical juncture. The company has been spending to build more data center capacity, and it has said that the benefits of those investments should start showing up in the second half of this year, making management’s forward guidance even more crucial than they’ve ever been.

“It’s great if you can bring on capacity, but you have to make money from that,” said BNP Paribas analyst Stefan Slowinski, who has an outperform rating on the stock. “The risk is if they’re cautious on that Q3 guidance on the operating profits, then it may not answer those concerns people have. And if all of that has to come in the fourth quarter, then just like with any stock it creates risk if you’re sort of putting all of your eggs into the Q4 basket.”

Wall Street expects the Livingston, New Jersey-based company to report a 111% rise in second-quarter revenue to $2.6 billion, and an adjusted net loss of $649 million compared with $131 million a year ago. Analysts have grown increasingly skeptical about this report, raising their projections for CoreWeave’s adjusted loss by 8.4% in the last month and 18% over the last three months.

CoreWeave also is expected to post an adjusted operating margin of 2.9% in the second quarter. The figure will be key for investors after falling to about 1% in the first quarter.

“I’m hoping that that margin was the low that we’ll see for the year, and that when they report this quarter, it’ll be up from the March trough and they guide to increases each and every quarter in margin,” said Paul Meeks of Freedom Capital Markets. “That’ll make me feel that the ding in short term property profitability is indeed behind us.”

The optimism is reasonable considering the biggest AI spenders like Alphabet Inc., Meta Platforms Inc. and Microsoft Corp. are maintaining or raising their capital expenditure plans. The three companies make up roughly 80% of CoreWeave’s revenue, according to data compiled by Bloomberg.

At the same time, the field is becoming increasingly competitive. Elon Musk’s SpaceX has inked a number of deals to sell AI computing power, and Meta is reportedly developing plans to do the same.

Still, Wall Street remains bullish on CoreWeave due to the overwhelming demand for AI infrastructure. Of the 43 analysts tracked by Bloomberg who cover the company, 29 have buy ratings. The average price target of around $138 implies shares will climb 57% over the next 12 months.

“AI infrastructure demand remains exceptionally strong and capacity largely sold out,” Citi’s Tyler Radke, who has a buy rating on the stock, wrote in an August 4 note to clients.

Of course, the stock’s position — up from a recent trough but still significantly below its all-time high — also sets up a potential buying opportunity. That is, as long as CoreWeave can deliver a solid outlook that calms concerns around its return on investment and gives investors confidence that it will be able to borrow at a cheaper cost of capital and deliver profits before long.

“If they can do that, then it’s kind of a self-fulfilling prophecy,” BNP Paribas’s Slowinski said. “All that has to come together to increase confidence in the company and in the business model.”