CoreWeave announced several massive deals in September.
The company is in high-growth mode.
While the opportunity is big, so are the risks.
CoreWeave (NASDAQ: CRWV) stock is flying once again after announcing a major deal with Meta Platforms. The artificial intelligence (AI) cloud service provider will receive up to $14.2 billion through the end of 2031 for providing Meta with guaranteed AI computing capacity.
Earlier this month, CoreWeave announced a similar deal with OpenAI and revealed a revenue guarantee from Nvidia for up to $6.3 billion. It's been a successful month for the high-growth data center company and a great six months for CoreWeave investors. Since the company IPO's in late March, its stock is up nearly 250%.
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So just how much would you have if you'd invested $10,000 in CoreWeave stock when it IPO'd? The 242% gain through Sept. 30 would have turned $10,000 into $34,200. Not bad.
Despite the flashy numbers and the impressive chart, I would caution investors from getting swept away in the excitement. CoreWeave is very new to the public markets and its growth is built on a rocky foundation. The company's growth is being fueled by expensive debt. It is walking a tightrope as it must expand capacity at a lightning pace in order not to fall short of what it is promising clients, but if it expands too quickly or AI demand sags -- a possibility that shouldn't be taken ignored -- CoreWeave could find itself in very hot water.
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Johnny Rice has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Meta Platforms and Nvidia. The Motley Fool has a disclosure policy.