Why I'm Still Not Buying CoreWeave Stock

Shares of artificial intelligence (AI) cloud infrastructure provider CoreWeave (NASDAQ: CRWV) have had a wild ride since going public in March 2025. And while the stock is down significantly from its 52-week highs, it has crushed the broader market this year, rising nearly 20% year to date.

But despite massive demand for cloud computing and a solid fourth-quarter update in late February, I am still not interested in buying the stock.

Why?

The business is undoubtedly growing at a breathtaking pace, but the investment looks more like a speculative gamble than a durable long-term bet. And when you factor in the company's valuation, the setup looks even worse. The market is already pricing in not just continued hypergrowth, but a massive inflection into profitability that is far from guaranteed.

Let me explain.

Image source: The Motley Fool.

Staggering sales momentum

To be fair to the bulls, CoreWeave's top-line momentum is mind-boggling. The company is successfully positioning itself as the infrastructure backbone for the AI boom, providing the heavy-duty computing power that tech giants and developers desperately need.

The evidence is in the numbers. In the fourth quarter of 2025, CoreWeave's revenue rose 110% year over year to roughly $1.6 billion. For the full year, total revenue skyrocketed 168% to $5.1 billion.

And the growth is not expected to slow down. Management guided for 2026 revenue of $12 billion to $13 billion, which represents an incredible 144% growth rate at the midpoint. Providing exceptional visibility into this future growth, the company ended the year with a massive revenue backlog of $66.8 billion -- a 342% increase from the prior year.

A costly expansion

But top-line growth is only one part of the equation.

The reality is that competing in the AI infrastructure race is incredibly expensive. CoreWeave is burning through cash to secure the physical real estate, power, and high-end graphics processing units (GPUs) required to build its data centers.

This heavy spending is weighing on its bottom line, resulting in a fourth-quarter net loss of $452 million.

Even more concerning is what it will cost to turn that $66.8 billion backlog into actual revenue. Management expects its capital expenditures to approximately double in 2026, reaching between $30 billion and $35 billion. That is a staggering amount of capital outlay for a company that expects to generate roughly $12.5 billion in revenue this year.

And this intense capital requirement translates directly into balance-sheet pressure.

As CoreWeave borrows heavily to fund its infrastructure build-out, the cost of servicing that debt is climbing rapidly. The company's interest expense more than doubled year over year in the fourth quarter to $388 million. Operating leverage usually helps companies scale into profitability, but when capital expenditures and interest costs are rising this fast, that inflection point gets pushed further down the road.

Investors have already priced in success

This brings us to the valuation.

With a market capitalization of $45 billion as of this writing, investors are paying a hefty premium for a fast-growing but also debt-laden, unprofitable operation. While a multiple of around 3.5 times management's 2026 revenue forecast might not seem egregious for a high-flying software business, CoreWeave is not a pure-play software company. It is a highly capital-intensive infrastructure provider with no profits in sight.

At this valuation, the stock leaves essentially no room for execution missteps. The current price already assumes that CoreWeave will flawlessly build out tens of billions of dollars in infrastructure, convert its backlog smoothly over the next few years, and eventually swing to massive profits. It also assumes that the pricing power for AI computing will remain robust, even as hyperscalers build their own competing data centers.

Ultimately, CoreWeave is executing an ambitious strategy in a booming market, and the company deserves credit for its phenomenal top-line expansion.

But a great growth story does not automatically make a great stock. Given the enormous capital expenditures required to sustain this growth and the heavy debt burden dragging down the bottom line, the stock simply carries too much risk. I prefer to stay on the sidelines and look for opportunities where the path to durable profitability is much clearer.

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.