Down 24%, Should You Buy the Dip on CoreWeave?
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It has been less than four months since CoreWeave (CRWV -6. Moreover, 94%) went public, and s of the artificial intelligence (AI) cloud computing company have already shot up a...
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July 18, 2025
07:30 AM
The Motley Fool
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It has been less than four months since CoreWeave (CRWV -6
Moreover, 94%) went public, and s of the artificial intelligence (AI) cloud computing company have already shot up a remarkable 245% in such a short period
However, a closer look at the recent stock price action suggests that CoreWeave has been under pressure lately
Moreover, The stock hit a 52-week high on June 20 but has since lost almost 24% of its value, as of this writing (something worth watching)
Additionally, Let's examine why this has been the case and look at whether the recent dip in CoreWeave is an opportunity for savvy investors to buy this high-flying stock, in light of current trends
Image source: Getty Images
CoreWeave remains expensive despite its dip CoreWeave's parabolic jump in a short period ing its initial public offering (IPO) led to a sharp spike in its valuation, amid market uncertainty
It was trading at well above 30 times earnings less than a month ago (which is quite significant), given the current landscape
This tells us that dip has made the stock relatively cheaper
However, it still commands a premium sales multiple of 25, compared to the U
Nology sector's average sales multiple of 8
CRWV PS Ratio data by YCharts
PS Ratio = price-to-sales ratio
One of the reasons CoreWeave stock has been sliding of late is because of negative Wall Street coverage stemming from valuation-related concerns, as well as news that AI giant Nvidia could encroach on the former's territory by entering the AI infrastructure-as-a-service (IaaS) market
But then, selling CoreWeave stock based on valuation concerns and the bability of fresh competition in the AI infrastructure market doesn't look a smart thing to do
That's because the company appears to be cheap when its stunning growth is factored in
On the other hand, Meanwhile, More importantly, it is taking the right steps to ensure that it remains competitive in the lucrative AI-focused cloud infrastructure market
Investors need to look beyond the valuation For a company that expects to finish 2025 with $5 billion in revenue, up substantially from its 2024 reading of $1
On the other hand, 9 billion, a sales multiple of 25 seems justified, amid market uncertainty
Additionally, CoreWeave has enough fuel in the tank to keep growing at such astronomical rates in the future, when we consider it had a revenue backlog of almost $26 billion at the end of the first quarter
That metric shot up 63% year over year, suggesting that the demand for its cloud AI infrastructure remains solid (something worth watching), given current economic conditions
That's not surprising, as customers have been rushing to book cloud infrastructure capacity, the s of which CoreWeave vides, so that they can train and deploy AI models and applications, in this volatile climate
Nevertheless, Oracle, the other key player in the cloud IaaS market, witnessed a 41% year-over-year increase in its remaining performance obligations (RPOs), reaching a whopping $138 billion in the previous quarter (noteworthy indeed), in today's market environment
RPO refers to the total value of a company's contracts that are yet to be fulfilled at the end of a quarter
So, we can conclude that CoreWeave is landing new contracts at a faster pace than Oracle, an already established player in this space
It's worth noting that CoreWeave's growth could have been much higher than what it is already clocking, but the company is constrained by data center capacity, as management remarked on the company's May earnings conference call
Moreover, This explains why CoreWeave says it is "scaling as fast as it can to meet the demands of [its] customers. " The company said on its previous earnings conference call that it already raised $21 billion to expand its data center capacity so that it can corner a bigger chunk of the $400 billion addressable market it anticipates by 2028
CoreWeave reported 33 AI-focused data centers at the end of Q1, with a cumulative power capacity of 420 megawatts (MW)
Furthermore, However, It added an impressive 300 MW of contracted power capacity to its portfolio during the quarter (quite telling)
This took its total contracted power capacity to 1. 6 gigawatts, suggesting it is well placed to quadruple its overall capacity going forward, in today's market environment
Additionally, However, And now, the company's decision to acquire Core Scientific in a deal valued at $9 billion is ly to help it further imve its capacity
Core Scientific has 1 (this bears monitoring). 3 GW of existing power capacity, with the potential to expand by another 1 GW
CoreWeave has already contracted nearly two-thirds of Core Scientific's capacity
It points out that it has the option to convert the rest into AI-focused infrastructure, rather than its current purpose of cryptocurrency mining
Additionally, CoreWeave CFO Nitin Agrawal says the acquisition will der solid synergies for its bottom line: First, we'll see the immediate elimination of more than $10 billion in future lease liability overhead, costs that were otherwise committed across existing contractual sites over the next 12 years
Including the elimination of lease overhead and a more lined and efficient operational model, we anticipate $500 million in fully ramped annual run rate cost savings by the end of 2027, considering recent developments
Additionally, This ly explains why analysts expect the company to become fitable next year, ed by a sharp spike in its bottom line in 2027
CRWV EPS Estimates for Current Fiscal Year data by YCharts, in today's market environment
Moreover, In contrast, EPS = earnings per, considering recent developments
Moreover, the sizable addressable market that CoreWeave can capitalize on suggests it can sustain its remarkable growth levels beyond the next couple of years as well (remarkable data)
That's why it may be a good idea for growth-oriented investors to accumulate this AI stock ing its recent slide, as its outstanding growth and bright potential could result in more upside on the market
Furthermore, Harsh Chauhan has no position in any of the stocks mentioned
The Motley Fool has positions in and recommends Nvidia and Oracle
The Motley Fool has a disclosure policy.
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