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Today we’re breaking down CoreWeave’s latest earnings report and asking: how worried should we be that its interest payments more than double its adjusted operating income last quarter?
First, a quick detour.
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COREWEAVE'S $846M PROBLEM 💳
CoreWeave (one of the neoclouds that rent out Nvidia's AI chips to companies like OpenAI) went into last night's earnings down ~42% in a month.
The worry was its debt.
CoreWeave borrows billions to buy those chips, and its interest bill has now grown bigger than the profit it makes from running the business.
Which made last night a big test for the stock (and so far it's up ~15% before the open this morning).
First, let’s start with the good stuff:
Revenue hit $3.66B, up 168% from a year ago and more than $1B higher than last quarter alone.
Adjusted operating income (profit from running the business, before stock-based pay and a few one-off costs) came in at $379M, way above the $200M-260M CoreWeave had forecast.
Its backlog (revenue already signed with customers but not yet delivered) now sits at ~$132.5B.
And it expects to finish 2026 on a $20B-21B run-rate (last month's revenue x12), for a company the market valued at ~$27B going into the report. 👇
Demand is still running way ahead of supply, too:
- CoreWeave says it has 10x more demand from vetted customers than it has capacity for through the end of 2027.
- It raised prices ~25% in July, another ~10% later in the quarter, and they're still rising this quarter.
- Rent for its older Nvidia chips (two and three generations old) jumped 30-50% from last quarter, and now sits above what customers originally signed up to pay.
Skeptics have long argued that old AI chips lose their value fast, but CoreWeave's older chips are now earning more than they did on their original contracts.
The risk is that all of this is getting built with borrowed money.
CoreWeave paid $846M in interest last quarter (up from $310M a year ago), more than double its adjusted operating income.
That's a big reason it still lost $709M, and it expects next quarter's interest bill to land between $1.05B and $1.15B (yikes!).
Total debt has also more than doubled since the start of the year, from ~$21.4B to ~$46.9B, as CoreWeave spent $9.4B on chips and data centers in Q3 alone.
Vincent (one of our PRO analysts) has been pointing at funding as the weak spot since October.
CoreWeave borrows upfront to build, then gets paid by customers over several years at mostly fixed prices. When lenders worry there won't be enough cash left over to cover the debt, they charge more for it.
That's why neocloud bond yields (the yearly return lenders demand for holding that debt) had climbed to ~15% when Vincent wrote it up.
And the more it costs to borrow, the bigger that $846M interest bill gets. 👇
Brad Gerstner (founder of Altimeter Capital) made a similar point recently: nobody knows what AI demand looks like in 12 months, so lenders charge extra for that uncertainty.
So how does CoreWeave plan to pay for it all?
- ~$9B in customer prepayments and deposits over the next three months, including more than $3B for re-renting chips it has already paid off.
- Less than $5B of new money raised by CoreWeave itself through 2027, with loans backed by specific customer contracts covering the rest.
- No new unsecured debt (loans with no specific assets behind them) at today's rates.
It also set up a program to sell up to 35M new shares over time (more shares = a smaller slice for existing holders).
CoreWeave expects to turn an adjusted net profit (after interest) in the first half of 2028.
Until then, owning it is a bet on AI chips staying scarce long enough for revenue to eventually outrun the interest bill.
Vincent expects that scarcity to last through 2028 at least, but still won't own neoclouds because of the debt - while Melvin says last night's call only made him more bullish on neoclouds.
The next smell test is due to hit tomorrow morning, when Nebius (a competing neocloud) reports its own numbers.
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