CoreWeave stock price jumped by 5% on Monday, mirroring the performance of the US equity market. CRWV rose to $93.35, up from this month’s low of $84.65, while its short interest has risen to 15.6%, a sign that some investors anticipate the crash will continue.
Microsoft snubs CoreWeave for Nebius
CoreWeave stock price soared even as Microsoft snubbed it and opted for Nebius, a company started by Arkady Volozh, the co-founder of Yandex, the biggest search engine.
In the $17 billion deal, Nebius will provide AI infrastructure to Microsoft in the next few years. It will do that from its new data center in New Jersey starting from later this year.
The deal mirrors the one that OpenAI signed with CoreWeave a few months ago. This five-year deal will see it provide dedicated AI compute capacity. The deal is worth over $11.9 billion.
The deal helped OpenAI to expand its service providers away from Microsoft and Oracle. It also helped the company to strengthen its position as an AI hyperscaler.
On the positive side, Microsoft’s deal with Nebius is a good thing for CoreWeave as it signals that there is still substantial demand for computing power. It also means that more hyperscalers like Amazon, Meta Platforms, and Google may be open to inking similar deals.
CoreWeave’s business is thriving
The recent financial results show that CoreWeave’s business is thriving as demand jumps.
CoreWeave’s revenue rose by 207% in the second quarter, making it one of the fastest-growing companies in the US. It made over $1.2 billion in Q2, much higher than what it made in 2023, when it made over $229 million.
CoreWeave also managed to narrow its losses in the quarter. Its net loss narrowed to $290 million from $323 million in the same period last year. The adjusted EBITDA rose to $753 million.
Most importantly, the company’s revenue backlog jumped by 86% in the last quarter to $30.1 billion. The company cited its deal with OpenAI as the main catalyst for the backlog jump. It also noted that it signed another deal with a large hyperscaler.
Still, the CRWV stock price has plunged in the past few months as concerns about its huge capital expenditure continues and after the lockup period. CoreWeave expects that its revenue will be between $5.15 billion and $5.35 billion this year, while its capital expenditure will be between $20 billion and $23 billion.
The stock has also declined due to its ongoing acquisitions. It entered a $9 billion deal to acquire CoreScientific, a move it expects will boost its power capacity and save it $10 billion in costs in the long term. The company recently bought OnePipe, a platform for training AI agents.
Read more: Nebius Group stock price eyes a 45% surge ahead of earnings
CoreWeave stock price analysis
The four-hour timeframe chart shows that the CRWV stock price has remained under pressure in the past few months, moving from a record high of $185 in June to a low of $85 this month.
It has recently formed a double-bottom pattern at $85 and a neckline at $105.55, its highest point on August 8.
A double-bottom pattern often leads to a strong bullish breakout over time. If this happens, the next point to watch will be at $148, its highest level on August 12 this year, which is about 58% above the current level.
On the other hand, a drop below the key support at $85 will invalidate the bullish CRWV stock outlook and point to more downside.
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