How CoreWeave’s bad news could make you 10x richer

Wall Street can be fickle, and CoreWeave investors experienced that reality firsthand when the stock plunged more than 16% on Nov. 11 following the company’s third-quarter earnings report. Despite posting revenue growth that would make most CEOs jealous, the market focused on one detail: reduced full-year guidance. However, savvy investors looking beyond the immediate headline might be witnessing one of those rare moments when temporary bad news creates a genuine buying opportunity.

The AI data center specialist reported revenue jumping 134% year over year to $1.36 billion in the third quarter, yet shares tumbled because management lowered its full-year revenue forecast to $5.1 billion from the previous $5.25 billion estimate. The reason for the adjustment? Delays from a third-party data center developer who fell behind schedule, not any fundamental problem with CoreWeave‘s business model or customer demand.

What really matters for the future

CEO Michael Intrator explained during the earnings call that the affected customer agreed to adjust delivery schedules and extend contract expiration dates, meaning the original contract value remains completely intact. This isn’t a lost deal or canceled order situation. It’s simply a timing issue in an industry where supply chains are stretched thin trying to keep pace with explosive demand.

The bigger story that got lost in the noise involves CoreWeave’s staggering revenue backlog, which surged 271% year over year to reach $55.6 billion in the third quarter. That figure represents actual contracted business waiting to be recognized as revenue over the coming years. Management expects to convert 40% of this backlog into revenue within the next two years, with another 39% coming through in months 25 through 48.

1. The AI infrastructure boom nobody saw coming

CoreWeave operates in a niche that’s becoming increasingly critical as artificial intelligence moves from buzzword to business necessity. The company builds and deploys AI-first data centers powered by graphics processing units, then rents that capacity to companies needing to run AI workloads without building their own expensive infrastructure.

According to Deloitte projections, AI data center capacity in the United States alone is expected to hit 123 gigawatts by 2035, representing a more than 30-fold increase from last year’s levels. That translates to annual capacity growth exceeding 36% for the next 11 years, driven by businesses across multiple industries adopting AI to boost productivity and enhance efficiency.

2. Expanding capacity at breakneck speed

CoreWeave isn’t just sitting on contracts and waiting. The company had 590 megawatts of active data center power capacity across 41 data centers in the third quarter, up from 33 data centers with 470 megawatts at the end of the second quarter. Even more impressive, its contracted data center power capacity jumped to 2.9 gigawatts from 2.2 gigawatts during the same period.

That contracted capacity represents energy CoreWeave has agreed to purchase from utility providers, which it can activate by outfitting data centers with necessary hardware. Management estimates bringing more than 1 gigawatt of contracted capacity online within the next 12 to 24 months, a significant jump from current active levels.

3. Major players are lining up as customers

The demand side of CoreWeave’s business tells an equally compelling story. Major cloud computing and AI companies are flocking to purchase compute capacity from the provider. Companies can train models, run AI inference applications, and build custom AI solutions without investing heavily in their own infrastructure or dealing with associated overhead costs.

This business model has proven wildly successful, helping explain why CoreWeave stock shot up 120% in 2025 since its stock market debut near the end of March. The company has generated $3.5 billion in revenue over the trailing 12 months, providing a baseline for understanding just how dramatically its top line could expand as it recognizes that massive backlog.

4. The math behind potential 10x returns

Analysts currently project CoreWeave will generate roughly $14 billion in combined revenue over the next two years. However, the company’s backlog stands at nearly twice that amount, suggesting actual growth could significantly exceed Wall Street expectations. If CoreWeave can maintain growth rates similar to the overall AI data center market expansion of 36% annually, its revenue could reach $46 billion by 2030.

Applying the U.S. technology sector’s current price-to-sales ratio of 9 to that projected revenue would put CoreWeave’s market cap at $414 billion after five years. That represents nearly 10 times its current market valuation, though the actual multiple could be even higher given the company’s focus on expanding into additional geographies.

5. Why supply constraints actually help

Intrator mentioned during the earnings call that while the company sees relentless demand for AI compute capacity, the supply chain remains stretched. This dynamic actually works in CoreWeave’s favor because it keeps competitors from flooding the market and protects pricing power. Major players across the industry are raising capital investments to build more capacity, but that takes time.

The stock’s recent decline following the earnings report creates what could be viewed as a buying opportunity for investors willing to look beyond temporary delays. The fundamentals driving AI adoption and data center demand haven’t changed, and CoreWeave’s position in this exploding market appears stronger than ever.

Source: Based on reporting from The Motley Fool via Nasdaq

Disclaimer: This article is for informational purposes only and not financial advice. Always research before making investment decisions.