CoreWeave's Backlog Is Huge. Here's the Risk Investors Shouldn't Ignore

CoreWeave (NASDAQ: CRWV), the "neocloud" AI infrastructure provider that serves Meta Platforms (NASDAQ: META), Microsoft, OpenAI, and Anthropic, is growing like a weed. From 2025 to 2028, analysts expect its revenue to surge from $5 billion to $43 billion.

CoreWeave's contracted revenue backlog grew 246% year over year to $104 billion in the second quarter of 2026, leaving it well positioned to expand as the AI market grows. Therefore, it might seem odd that with an enterprise value of $91 billion, it's valued at just seven times next year's adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA).

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CoreWeave's stock trades at that discount because investors aren't sure its business model is sustainable. Let's see why that's a major risk that will continue to compress its valuations.

What is CoreWeave's sustainability issue?

By using dedicated cloud-based GPUs, CoreWeave can process AI tasks about 35 times faster and at 80% lower cost than bigger cloud infrastructure platforms. At the end of 2022, CoreWeave only operated three data centers. Today, it operates 51 data centers, which run on more than a quarter million GPUs from Nvidia (NASDAQ: NVDA), one of its top investors.

New debt and stock offerings drove that expansion. At the end of the second quarter of 2026, it had $72 billion in total liabilities but only $5 billion in stockholders' equity, resulting in a debt-to-equity ratio of 14.4. It's already increased its outstanding shares by 19% since its 2025 IPO, and it plans to sell another 35 million shares (11% of its float) in an at-the-market (ATM) sale alongside an upsized $4.2 billion offering of convertible senior notes.

CoreWeave needs to keep taking on more debt and diluting its shares because it's still deeply unprofitable by generally accepted accounting principles (GAAP). For 2026, analysts expect its adjusted EBITDA to surge 151% to $7.6 billion, while its GAAP net loss is expected to more than double from $1.2 billion to $2.8 billion. That's because its adjusted EBITDA excludes all interest it pays on its debt and depreciation on its servers. Those aren't "one-time" expenses that can simply be brushed aside, and rising interest rates will drive those costs even higher.

So while CoreWeave's massive backlog indicates there's plenty of pent-up demand for its cloud-based AI infrastructure services, it's unclear whether the company can open enough data centers to convert that backlog into actual revenue without breaking the bank. That's why its stock will remain under pressure unless the Fed starts cutting rates again.

Leo Sun has positions in Meta Platforms. The Motley Fool has positions in and recommends Meta Platforms and Nvidia. The Motley Fool has a disclosure policy.