CoreWeave just sealed a $4 billion expansion deal with OpenAI that runs through April 2029, but investors aren’t celebrating. The specialized cloud provider’s stock dropped 2.5% Thursday as Wall Street grappled with the company’s eye-popping spending plans that dwarf its revenue projections.
The New Jersey-based firm plans to burn through $20 billion to $23 billion in capital expenditures this year alone—roughly four times its expected 2025 revenue of $4.9 billion to $5.1 billion. That’s the kind of math that makes CFOs break out in cold sweats.
CoreWeave’s first quarterly earnings as a public company revealed the brutal economics of the AI infrastructure game. Revenue hit $981.6 million in Q1 2025, a fivefold jump from the previous year. But the company posted a net loss of $1.49 per share, wider than last year’s $0.62 loss. The damage included $177 million in stock-based compensation tied to its March IPO.
The OpenAI deal builds on an existing $11.9 billion five-year contract where CoreWeave provides cloud computing power for ChatGPT. The original agreement also gave OpenAI a stake in CoreWeave, creating an intricate web of mutual dependence.
CEO Michael Intrator and his team initially played coy about the $4 billion expansion, referring only to a “large-scale AI enterprise” during Wednesday’s earnings call. Regulatory filings the next day confirmed OpenAI as the mystery customer.
CoreWeave also landed another hyperscaler client, though executives won’t name names. Morgan Stanley and MoffettNathanson analysts speculate it could be Google-parent Alphabet, which reportedly held talks about renting Nvidia chips from CoreWeave back in April.
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But not everyone’s buying into CoreWeave’s hyperscaler strategy. “Hyperscalers are direct competitors to CoreWeave and are only temporarily using CoreWeave for overflow capacity,” said D.A. Davidson & Co analyst Gil Luria. “They will likely go away once they have built out enough of their own data centers.”
That warning carries weight in an industry where today’s customer can become tomorrow’s rival. Microsoft, Amazon, and Google are all racing to build their own AI infrastructure, potentially reducing their reliance on specialists like CoreWeave.
The revenue backlog tells a different story. CoreWeave sits on $25.9 billion in committed future revenue as of March 31, 2025, with the OpenAI deals contributing heavily to that cushion. Seven brokerages have raised price targets to between $50 and $80, and the stock has surged 69% from its IPO price.
Nvidia’s 7% stake in CoreWeave adds another layer to the AI ecosystem puzzle. The chip giant has a vested interest in companies that can efficiently deploy its high-demand GPUs at scale.
The timing couldn’t be more complex. Companies continue pouring billions into AI infrastructure even as DeepSeek’s low-cost models have investors questioning whether the returns justify the massive capital outlays.
CoreWeave’s aggressive expansion reflects the capital-intensive reality of the AI infrastructure business. Building data centers stuffed with expensive Nvidia GPUs requires enormous upfront investments before the first dollar of revenue flows in.
The company’s immediate challenge: convince investors that the spending spree will generate returns worth the risk. With $25.9 billion in revenue already locked up and major clients like OpenAI committed through 2029, CoreWeave believes it has time on its side.
Whether that faith pays off depends on how long the AI boom lasts and whether CoreWeave’s hyperscaler clients stick around once they finish building their own data centers. In the meantime, CoreWeave is betting big that demand for specialized AI computing will outpace supply for years to come.
The next few quarters will test whether that bet was brilliant or reckless.
