CoreWeave (CRWV) sits at the center of the artificial intelligence (AI) infrastructure buildout, yet its $104 billion backlog doesn’t solve its $35 billion debt problem. CoreWeave partners with Nvidia (NVDA) to give customers access to Nvidia’s graphics processing units (GPUs). CoreWeave leases data centers, installs computing infrastructure such as servers and networking equipment inside, then rents access to customers for its compute and related cloud services.
I believe this model puts CoreWeave in a good position to capture short-term AI compute demand. However, it also requires significant capital and carries some financial risk. Therefore, I am bearish on the stock over the long term given its debt load and increasingly competitive environment.
Net Losses Overshadow Revenue
On the Q2 earnings call, CoreWeave reported $2.58 billion in revenue for the quarter, up 112% year-over-year. It also reported a net loss of $626 million and $35 billion in total debt, up from $21 billion at year-end 2025. Access to capital lets the company scale faster than competitors, but rising debt and compounding interest make financing a substantial risk. Financing is logical as long as a company can afford it, but it hasn’t had a profitable quarter since going public on March 28, 2025.
While the total debt is around 6.8x reported year-end 2025 revenue, it gets worse. The company reported $640 million in interest expense in Q2 2026, up from $267 million in 2025. It provided full-year capex guidance for $35-$39 billion with negative free cash flow.
This indicates that the company will continue financing its expansion and growing its interest expense. On the call, CEO Michael Intrator stated: “demand continues to intensify.” My concern is around what will happen when interest rates rise, and the AI narrative shifts negatively, rather than regarding capex.
Management estimates that a 100-basis-point increase in rates would add about $30 million in interest expense per quarter. The company uses interest-rate swaps for some exposure, but most of its credit debt is variable-rate, and most of that exposure is unhedged. When interest rates rise, its net income and cash flow will decrease while the cost of capital for additional financing could increase. Equity financing through new share offerings could also be depressed if the stock price drops.
CoreWeave’s Demand for Compute Exceeds Supply
Although CoreWeave reported a $5.7 billion free cash flow loss in Q2 2026, demand for compute far exceeds supply since the company’s backlog has grown to $104 billion, up 246% year-over-year.
That said, it’s fair to conclude it has a strong competitive advantage in the short term, and can weather the financing needed to build out the 8 gigawatts (GW) management expects to have online by 2030. For instance, Nvidia recently signed a $500 billion deal with Wall Street firms, so CoreWeave could benefit from this considering the GPU partnership.
My concern is that the company needs contract renewals beyond 2030 to justify capex deployment, but its customers are building their own AI infrastructure. With companies like SpaceX (SPCX), Meta (META), Amazon (AMZN), Microsoft (MSFT), Alphabet (GOOGL), and Oracle (ORCL) bringing more GWs online, supply will increase significantly by 2030 and could reduce the dependence on CoreWeave.
For example, Meta is a major customer, but it is considering developing a cloud business and discussed signing a deal with Anthropic as a customer for compute. Committed contracts accounted for 98% of Q2 revenue, so if customers build alternatives, this will drastically impact revenue.
On the recent earnings call, CFO Nitin Agrawal mentioned, “we recently signed an A100 contract that extends into 2029 at an attractive price.” Depreciation costs for older GPUs can extend beyond five years, but this is a double-edged sword since it also increases supply and indicates customers don’t need cutting-edge Nvidia GPUs.
CoreWeave’s Stock Price Volatility
CoreWeave’s stock price was $117.95 on June 16, 2026, and it went to $60.82 on July 29, 2026. It then rallied again to $107.73 on August 12, 2026. Volatility is great for short-term traders, but this kind of price action indicates the stock trades based on narrative and headlines rather than on fundamentals. The stock has a beta of 1.62, suggesting it’s sensitive to macroeconomic conditions. The company isn’t profitable yet, so it can’t be valued based on earnings.
Comparing CoreWeave’s trailing-12-month (TTM) EV/Sales multiple of 13.52x to Nebius’ (NBIS) 50.67x shows how debt is already impacting CoreWeave’s valuation. Investors appear to be betting the revenue won’t convert to free cash flow in the future.
Along with the depressed EV/Sales ratio, CoreWeave’s TTM Debt-to-Capital ratio is 91% versus 49% for Nebius. This suggests its debt makes up 91% of its capital structure. As a benchmark, a moderate debt-to-capital ratio is around 50%, and anything more than 75% can be considered aggressive leverage. Since the stock price is volatile and the company has a lot of debt, it’s hard to justify this being anything more than a short-term trade.
Catalysts to Watch in Q3 2026
The biggest catalyst to watch for in Q3 2026 is backlog conversion. CoreWeave forecasts more than 66% of the Q2 backlog will get delivered to customers, with roughly 41% of the total $104 billion backlog expected to convert to revenue within 24 months. If the backlog doesn’t convert to revenue as expected, this could add pressure to the stock price since interest expense compounds each quarter.
Another factor to watch is its bond rating. S&P Global (SPGI) issued a B+ rating with a positive outlook on April 9, 2026. If interest rates rise and CoreWeave’s bond rating falls, this would push the company closer to a default rating and increase the cost of capital. With a B+ rating, the company carries a junk rating. This is the biggest concern since interest rates could rise soon.
Lastly, I will be watching for the GW rollout since Agrawal stated on the Q2 call, “we now expect to end the year with more than 1.85 GW of active power,” up from the current 1.5 GW that’s active. This expansion is essential to generate enough revenue to service its $640 million quarterly interest expense. 1 GW of power is expected to generate roughly $10 billion in revenue.
CoreWeave on Wall Street
Turning to Wall Street, CoreWeave has a Moderate Buy rating, based on 17 Buy ratings, six Hold ratings, and one Sell rating. CoreWeave’s average price target of $136.48 represents 29.66% upside potential over the current price of $105.26 for the next 12 months.
The Bottom Line
For CoreWeave, the issue is not demand. My concern is that the company has aggressively financed growth for future cash flows. However, there is no guarantee those contracts renew once the compute supply matches demand.
Customers will likely take a hybrid approach for compute since it could be cheaper to rent cloud hardware. However, it’s hard to forecast CoreWeave’s demand once its customers have their own AI infrastructure solutions. Given its combination of debt, negative free cash flow, and competitive environment, I remain bearish on the stock. I believe better opportunities exist in the market right now.