4 Reasons Not to Buy the Dip in CoreWeave's Stock

Shares of CoreWeave (NASDAQ: CRWV) have cratered recently. As of this writing, they've fallen more than 60% from a 52-week high of $187 achieved earlier this year.

The stock's slide comes amid a broader pullback in many artificial intelligence-related names as investors worry if today's AI buildout boom could peak soon. As a cloud infrastructure company tied directly to the aggressive AI buildout, CoreWeave shares have been hit harder than some of the more diversified tech companies operating in the space.

The pullback in CoreWeave's stock may be tempting some investors to get in on the growth story at these lower prices. But is this really a buy-the-dip moment? Or is the stock's pullback a sign of some deep underlying risks, ultimately showing why investors may want to stay on the sidelines when it comes to CoreWeave shares?

Unfortunately, I believe the latter is closer to reality. Here are four reasons I'd stay away from the stock, despite the market offering up a much lower entry point.

Image source: Getty Images.

1. CoreWeave is still losing money

CoreWeave's top line is exploding, but its losses are huge. According to its S-1 filing, revenue for the year ended Dec. 31, 2024, rose to about $1.9 billion, up from $229 million in 2023, yet the company posted a net loss of $863 million in 2024 and $594 million in 2023.

The first half of 2025 did not reverse that pattern. In the first quarter of 2025, revenue jumped 420% year over year to about $982 million, but CoreWeave recorded a net loss of approximately $315 million. In the second quarter of 2025, revenue climbed again to $1.21 billion, up from $395 million a year earlier, yet the company still lost about $291 million.

And even when quarterly revenue hit $1.36 billion in Q3, CoreWeave was still reporting a net loss of $110 million.

CoreWeave is demonstrating that AI demand is real, yet achieving substantial profitability (especially in relation to its $35 billion market capitalization) is still a distant goal.

2. Customer concentration is extreme

Perhaps the biggest risk for CoreWeave is its customer concentration. The company's S-1 filing reveals just how dependent the business is on a small group of very large customers. In 2024, the company generated 77% of its revenue from its top two customers, and its largest customer alone accounted for 62% of revenue.

3. Capital needs remain heavy

AI infrastructure is extraordinarily capital-intensive, and CoreWeave's financials show how demanding that model can be. In 2024, net cash used in investing activities reached about $8.7 billion, largely driven by capital investments in GPU fleets, networking hardware, and data center buildout. In the first nine months of 2025 alone, the company spent more than $6.2 billion on property and equipment -- again funded largely through debt and other financing.

That spending has left the balance sheet highly leveraged. As of Q3, CoreWeave carried about $14 billion of debt between current and noncurrent borrowings. Net interest expense for the first nine months of 2025 totaled more than $841 million -- up sharply from the prior year.

4. A pricey valuation

Even after the recent sell-off, CoreWeave's stock does not look cheap relative to its current fundamentals.

Management's guidance earlier this year called for 2025 revenue of $5.15 billion to $5.35 billion, and that forecast has already been reduced. Management is now calling for full-year revenue of $5.05 billion to $5.15 billion. Even if revenue still lands a bit above $5 billion, the stock is trading at roughly seven times this year's expected sales, despite ongoing generally accepted accounting principles (GAAP) losses and a capital structure that depends on substantial borrowing.

This is a steep valuation for a tech company with extreme customer concentration, tons of debt, and no profits -- not to mention the fact that the company's business model is largely dependent on an AI boom that is difficult to predict.

For these reasons, I'm going to remain on the sidelines, even with CoreWeave stock trading substantially lower than it was a few months ago.

Daniel Sparks and his clients have no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.