CoreWeave Right Place at the Right Time
Founded by three former commodities traders in New Jersey, ‘Atlantic Crypto’ first opened up shop as a crypto mining company, leveraging its graphic processing units (GPUs) to earn crypto rewards. At the time, crypto was becoming mainstream, Bitcoin was on its way to ~20x gains in two years, and business was good. However, in 2018, fate intervened when the crypto markets crashed and Bitcoin fell 80% from its peak.
CoreWeave Pivots from Crypto Mining to AI
While it didn’t seem like it at the time, the crypto crash would ultimately prove to be the best possible outcome for the company. Instead of fighting a brutal crypto bear market, the Atlantic Crypto team pivoted, sensing the incoming AI revolution. In 2019, the company changed its name to CoreWeave (CRWV). What happened next was an incredible stroke of luck, coupled with foresight.
CoreWeave had exactly the right ingredients to pivot into an AI juggernaut, including multiple data centers and the hard-to-get and highly coveted Nvidia (NVDA) H100 chips. Between a unique agreement with Nvidia and its existing data center infrastructure, CoreWeave began providing cloud computing infrastructure necessary to train large language models (LLMs) to big tech companies, just as the AI race heated up and billions in CAPEX would be spent. Meanwhile, as an early mover, CoreWeave has optimized its platform to meet specialized AI needs, offering industry-best performance at a fraction of the price.
CoreWeave Earnings Preview
· When: On Monday, November 10th, CoreWeave will report its third earnings results as a public company after the US equity market closes.
· Wall Street Expectations: Zacks Consensus Estimates suggest revenue of $1.28B and EPS of $-0.39.
· Expected Move: Because CRWV is a volatile, relatively new stock, the earnings move is expected to be large. The options market is implying a ~18% move post-EPS.
Is AI Spend Sustainable?
Heading into CRWV EPS, one big question mark for the company is how sustainable the massive CAPEX AI spending will be. Earlier this month, the sustainability came into question when OpenAI CEO Sam Altman took offense to a question from investor Brad Gerstner, who asked, “How can a company with $13 billion in revenues make $1.4 trillion of spend commitments?” Meanwhile, Meta Platforms (META), one of the biggest spenders, recently secured $30 billion in private financing for its latest data center investments. Over the past few quarters, CRWV has won multi-billion-dollar contracts from each company.
Bottom line
CoreWeave has transformed from a crypto miner to one of the most critical infrastructure providers in the AI boom. With demand for AI compute accelerating, CRWV’s earnings will be among the closely watched reports on Wall Street.
Beyond Nvidia: AI's Second Wave Is Here
The AI revolution has already minted millionaires. But the stocks everyone knows about aren't likely to keep delivering the biggest profits. Little-known AI firms tackling the world's biggest problems may be more lucrative in the coming months and years.
See "2nd Wave" AI stocks now >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
NVIDIA Corporation (NVDA) : Free Stock Analysis Report
Meta Platforms, Inc. (META) : Free Stock Analysis Report
CoreWeave Inc. (CRWV) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
Zacks Investment Research
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
