CoreWeave stock price has surged to a record high as investors cheer the recent earnings and its continued growth. It jumped to a high of $83.97 on Friday, up by 150% from its lowest level this year. This surge brought its market cap to over $38 billion, making it one of the top players in the AI industry.
Why CoreWeave stock price is soaring
CorweWeave is one of the companies that have come up during the ongoing artificial intelligence wave.
It is an infrastructure company that owns large data centers in the United States and Europe and is expanding in other places.
The company mainly focuses on NVIDIA GPUs and AMD’s CPUs, which it offers to companies building AI products.
For example, instead of buying NVIDIA’s HGX H200 GPU that costs for over $150,000, one can pay $50 an hour to use it.
CoreWeave’s business is also used by some of the biggest companies in the tech industry like Microsoft, OpenAI, Meta Platforms, and IBM. Microsoft accounts for about 62% of its revenue.
The most recent financial results showed that CoreWeave’s business continued growing, a sign that the AI growth is continuing. Its revenue jumped by 420% to $981 million in the first quarter.
Most importantly, the company reported a backlog of over $25.9 billion during the quarter as it expanded its relationship with firms like IBM and OpenAI.
The company also showed improved profitability metrics. The adjusted operating income jumped to $163 million, up by 17% from the same quarter last year. This happened as the adjusted operating margin rose to 17%. Its adjusted EBITDA jumped to $606 million during the quarter.
CRWV issued a strong guidance
CoreWeave’s guidance showed that its business will continue growing. The management expects the data to show that its revenue will come in at between $1.06 billion and $1.1 billion in Q2, much higher than the $395 million it made in the same period last year.
Chances are that the company’s revenue will be much higher than its guidance, since similar companies are often highly conservative.
CoreWeave’s adjusted operating income is expected to be between $140 million and $170 million, while its capital expenditure will be between $3 billion and $3.5 billion.
The annual revenue will be between $4.9 billion and $5.1 billion, while its capital expenditure will be between $20 billion and $23 billion. These are all strong numbers for a company that was started in 2017.
Analysts are largely bullish on the CoreWeave stock price, with the average estimate by analyst being $80.30, up from the current $65.
CoreWeave faces numerous risks ahead. The first one is its growing capital expenditure, which is being funded by debt. This capex and the accompanying cash burn will likely continue growing as it increases its data centers.
Further, the company will need to continually buying more new GPUs and CPUs as companies like NVIDIA and AMD launch them.
CoreWeave stock price analysis
The two-hour chart shows that the CoreWeave share price has been in a strong bullish uptrend in the past few days. It recently moved above the key resistance point at $64.65, its highest swing since April 2.
CoreWeave stock price has remained above the 50-period moving average. Therefore, the most likely scenario is where the stock retreats to $64.65 in the coming days, and then it resumes the uptrend. In the long term, the stock will likely continue rising and possibly hit the resistance point at $100.
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