The Most Direct Bet You Can Make on the AI Boom
Artificial intelligence ("AI") is more than just a new technology that'll make everyone a little more efficient.
It's creating entire industries and business models in real time.
For instance, one particular business model that barely existed a few years ago now rakes in several billions of dollars in revenue... and has a path to perhaps hundreds of billions ahead.
But it's a tricky business to understand (and profit from).
I'm talking about "neoclouds" – specially designed data centers that provide computing power for AI and operate outside big "hyperscalers" like Microsoft (MSFT), Alphabet (GOOGL), and Amazon (AMZN).
The leader in this industry is, far and away, CoreWeave (CRWV).
CoreWeave has gone on an incredible ride from a private valuation of just $32 million before ChatGPT launched... to a public listing with a $65 billion market capitalization.
Shares are up 200% since the company went public in March 2025. But that ride hasn't been a straight climb. As you can see, the stock has ridden the roller coaster of AI hype...
CoreWeave is in a tough business. The company plans to spend $11 billion this year, and an expected $32 billion next year, building these specialized data centers. That's a huge chunk of its revenue.
Still, as I'll explain, this company sits at the very center of the AI boom with numerous competitive advantages – including scale, superior infrastructure, and a partnership with the world's leading chipmaker.
All told, CoreWeave is a direct, leveraged bet on AI... and a clear Top Stock.
Three Big Ideas About CoreWeave
The Silent Partner That Changes Everything
CoreWeave runs data centers packed with graphics processing units ("GPUs") for AI workloads.
Overall, it operates 43 data centers, mostly in the U.S., with more than 850 megawatts of power... making it the largest neocloud in the world.
It sells that computing power to all the best AI companies, including Microsoft, Meta Platforms (META), Anthropic, and OpenAI.
But what makes CoreWeave different from every other neocloud is the partnership it has with chipmaker Nvidia (NVDA).
Nvidia owns 11% of CoreWeave. It bought an initial $100 million stake in 2023, participated in the company's initial public offering (meaning it bought more shares), and then invested another $2 billion in CoreWeave earlier this year.
More importantly, Nvidia has committed to buying any unused capacity CoreWeave has through 2032. That means if customers don't show up... the largest and most profitable company in the world will step in and buy what's left.
That backstop comes with something even more valuable – priority access to the newest chips.
CoreWeave has inked deals with Meta and quantitative trading firm Jane Street in which the two companies will buy billions of dollars' worth of computing power from CoreWeave. And the deals are specifically tied to the deployment of Nvidia's next-generation Vera Rubin platform – chips that aren't even out yet.
In other words, as other data centers scramble for scarce supplies, CoreWeave is already at the front of the line for the best, newest chips.
The Scariest Balance Sheet in Tech Might Also Be the Smartest
CoreWeave is approaching $30 billion in total debt.
The company's interest expense alone was $1.2 billion last year and could hit $3 billion this year.
Free cash flow was negative $7 billion... and might be negative $25 billion this year.
At face value, these numbers look like a disaster.
But the other side of the ledger tells a different story...
CoreWeave has more than $60 billion in remaining performance obligations – essentially take-or-pay contracts from some of the biggest companies on the planet. That's cash guaranteed to come in the door.
Plus, CoreWeave has pioneered a new form of financing: GPU-backed bonds. Put simply, it's using GPUs as collateral to lower borrowing costs.
This is what happens when demand is, in management's own words, "overwhelming, insatiable, and relentless."
You borrow... and you build.
The question isn't whether the debt is too much. It's whether the demand on the other side is large enough to support it.
CoreWeave is borrowing billions to bet more on the AI boom. If the AI boom falters, it'll be in rough shape. But if the AI boom continues, its investments will ultimately have a positive rate of return.
And again, some of the biggest companies in the world have committed to buying computing power from CoreWeave. We're talking Nvidia, Meta, OpenAI, Anthropic, and Microsoft.
That's a level of dependability not many other companies can claim.
The AI Boom Still Has Room to Run
If the bubble bursts, CoreWeave will suffer.
But the current mood (and data) says we're not there yet... especially when you look at demand for computing power.
For instance, Anthropic's revenue run rate more than tripled in a single quarter – from $9 billion to $30 billion. But the company is so constrained when it comes to computing power that it has had to throttle some of its own models. (In other words, there's a limit on who can use its AI models and for how long.)
So it's already scrambling to keep up.
And yet, another wave is coming...
The AI boom has moved through three phases so far – generative AI, then reasoning models, and now agentic AI.
AI agents today can execute multistep tasks, plan autonomously, browse the Internet, and use various tools simultaneously. They work for hours, not seconds. And they consume far more inference compute than a simple chatbot.
That shift matters for CoreWeave because inference – the computing power needed to run models after they're built – is projected to grow at 35% annually over the next five years.
Even if AI progress stopped today, just the adoption curve on what already exists would justify more data centers than we currently have.
The data-center buildout, as fast as it has been, hasn't created a surplus of capacity. If anything, it's the opposite. There's not nearly enough computing power.
If there's a bubble, the peak is still ahead of us – not behind.
Watch to Learn More
I recently sat down with our lead analyst, Alan Gula, to discuss neoclouds and CoreWeave. Alan had the opportunity to invest in CoreWeave in early 2024, ahead of its public debut. To hear his perspective on that investment – along with more on CoreWeave's competitive advantages and the key risks and rewards – check out today's Top Stocks video.
You can watch the entire episode on our YouTube page by clicking the image above. Be sure to like and subscribe to get more of our videos.
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Straight to the Source
- CoreWeave's most recent quarterly earnings presentation
- CoreWeave's flurry of deals with Meta, Anthropic, and Jane Street
- Nvidia CEO Jensen Huang on his company's relationship with CoreWeave
Until next week,
Matt Weinschenk
Publisher and Director of Research
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