I have a virtual private server with several services running on it. It has replacements for Google Drive, Whatsapp, and Github (or Gitlab). Getting a sufficiently good internet connection that would allow me to use a real (on-premise) machine instead of a virtual one is very difficult where I live.
I’ve been maintaining this server without any (serious) problems for a couple of years. However, in the past few months, the situation has changed, for the worse.
Nothing brings me more joy than an occasional email from my VPS provider telling me that my server’s CPU usage has been averaging at 98% for the last 2 hours. My server, which was almost invisible for a very long time, has become a target of scrapers and scanners.
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I am not alone in having this issue. Many prominent open-source projects had to protect themselves, too, and recently they started using “Anubis” for this. (Not the malware with the same name)
Why the sudden change, you might ask? Well, an increasing number of companies think they will be the ones to create this ‘incredible artificial intelligence.’ So, they are scraping any website, regardless of whether its data is relevant and reliable. The more data they can collect, the better, seems to be the prevailing modus operandi. And once they’re done collecting, throw everything into the blender and hope for the best.
AI training “blender” as a service
What if you are a little startup, with the aforementioned goals of writing incredible AI, and you’ve done the previous step of collecting the data, and now you just need that blender? Perhaps you have some investor money, but can’t build that blender yourself. After all, Graphics cards used for AI training cost an arm and a leg.
This is where CoreWeave (CRWV) comes in.
Just like the VPS providers that enable people like me who can’t use real machines for their servers to use their servers instead, CoreWeave enables companies that can’t afford AI servers to do their AI training on its GPU mega clusters.
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Considering that the company’s business model is “renting” Nvidia (NVDA) graphics cards, it is not surprising that the company has become Nvidia’s largest holding, making up more than 78% of Nvidia’s disclosed portfolio.
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CoreWeave released its earnings report for Q1 2025 on May 14th. Here are the highlights:
Revenue of $981.6 million, a 420% increase year-over-year.Net loss of $314.6 million, a 143% increase YoY.Adjusted EBITDA of $606.1 million, a 480% increase YoY.
Guidance for the full year 2025 was:
Revenue from $4.9 billion to $5.1 billionCapital expenditures of $20 billion to $23 billion
Bank of America analysts downgrade CoreWeave stock rating
Bank of America analysts, Brad Sills and Carly Liu, shared their opinions on the CoreWeave stock.
“In our view, the AI infrastructure [capital expenditures] growth rate is peaking, though still very healthy (estimates are likely to move higher on a larger base), led by OpenAI. OpenAI’s ChatGPT is the single largest consumer of AI workloads and is growing at a rapid pace. Therefore, we see solid sustained demand in CoreWeave’s AI infrastructure market,” said analysts
In Q1, CoreWeave expanded its deal with OpenAI bringing the total contract value to $15.9 billion.
The company also signed a new hyperscaler customer in Q1. It has also increased the average contract duration to four and a half years from four years since 2024.
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Analysts forecasted $21 billion of negative free cash flow for the company through calendar year 2027, driven by high capital expenditures.
CoreWeave funds the majority of its capital expenditures with debt. The company managed to lower the interest rate in the recent debt raise of $2 billion to 9.3%, from 11% in calendar year 2024. “However, this remains a small % of the total incremental debt required from here, raising some questions, in our view,” continued analysts.
Sills and Liu noted that the stock is trading at twenty-five times its calendar year 2027 EBIT estimate, which is a premium to the peer group that is trading at sixteen times the estimate.
They set the new price objective for CoreWeave, raising their target from $76 to $185, which is 29 times their calendar year 2027 EBIT estimate (vs. 16x previously), or 0.4 times adjusted for 69% growth.
That said, they cut their rating on the stock after CoreWeave’s recent rally, arguing there’s less room for shares to head higher.
“We believe much of the near-term upside has been priced in and downgrade our rating to neutral from buy,” concluded analysts.
