CoreWeave (NASDAQ:CRWV) reported Q3 results, and the numbers were impressive – revenue more than doubled from last year, and losses narrowed as well. Still, that didn’t help the stock, as delays in data center powered shell deliveries sent shares tumbling 16% in Tuesday’s session.
Meet Your ETF AI Analyst
- Discover how TipRanks' ETF AI Analyst can help you make smarter investment decisions
- Explore ETFs TipRanks' users love and see what insights the ETF AI Analyst reveals about the ones you follow.
Digging into the details, CoreWeave posted a loss of $0.22 per share, while revenue climbed 132.9% year-over-year to $1.36 billion, topping expectations. Analysts had anticipated a wider loss of $0.51 per share on revenue of $1.28 billion.
However, management’s tone for the coming quarter was more cautious. The company guided for Q4 revenue of about $1.54 billion, below the Street’s $1.8 billion estimate, primarily due to the aforementioned delays in third-party data center deliveries. Importantly, CoreWeave emphasized that the issue stems from temporary supply constraints rather than a slowdown in demand. The delayed capacity is expected to be delivered by early 2026, while the company’s robust $55.6 billion backlog, anchored by major contracts with Meta and OpenAI, underscores the depth of long-term demand for its AI infrastructure services.
For Citizens JMP analyst Greg P. Miller, the results underscore the growing momentum among hyperscalers to outsource compute operations in order to accelerate time to market, reduce tech risk, and limit balance sheet exposure. Miller specifically points to the RPO of $55.0 billion, a figure that came in well above the Street’s estimate of $44.0 billion.
Although CoreWeave did not specify which supplier failed to deliver, based on recent industry commentary, a lawsuit filed on September 10 by an employee following a transformer explosion in Denton, Texas, and Applied Digital’s on-time delivery update, Miller thinks the “culprit” is most likely Core Scientific.
Despite the supply chain delays, the customer has reportedly revised its delivery schedule, so the value of the underlying contract remains unaffected. While such shortfalls are expected in an industry that is “increasingly supply challenged,” Miller believes that end-user customers will probably be less tolerant in the future. Similar delays are likely to result in shifts in market share for new capacity as competition continues to rise.
While Q3 was a “less-than-perfect reported quarter,” for Miller, the valuation here is still appealing.
“Despite some near-term supply chain noise, we believe CoreWeave’s position as a leading GPUaaS provider continues to make the stock attractive,” the analyst said. “Accelerating RPO growth reinforces strong demand for GPUaaS, supporting our view that CoreWeave is well positioned to capture share in this rapidly expanding market.”
Bottom line, Miller assigns CRWV shares an Outperform (i.e., Buy) rating, along with a $180 price target, suggesting the stock will gain ~104% in the months ahead. (To watch Miller’s track record, click here)
What about the rest of the Street? Analyst opinions are more mixed here; 12 Buys, 13 Holds, and 1 Sell combine for a Moderate Buy consensus. That said, the average price target of $149.29 still points to ~69% upside from where the stock currently trades. (See CRWV stock forecast)
To find good ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a tool that unites all of TipRanks’ equity insights.
Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.