Down 28%, Should You Buy the Dip on CoreWeave?

From an analytical perspective, CoreWeave (CRWV 4

After weaker-than-expected demand for its IPO, CoreWeave went public for a lower price than it had targeted, and Nvidia came in and invested in the stock to help p up the offering

Additionally, The stock then slumped as the broad market sold off in response to the "Liberation Day" tariffs that President Trump issued (something worth watching)

However, after bottoming in April, CoreWeave began to rally, tracking with a boom in AI stocks (something worth watching)

Nevertheless, Should investors buy the dip in the stock (something worth watching)

Let's take a closer look

Moreover, Conversely, Image source: Getty Images

High risk, high reward CoreWeave is one of the fastest-growing stocks in the market, and because of its growth and lack of fitability, it's also one of the highest-risk stocks

CoreWeave depends on building out data centers so it can supply its customers, Microsoft, Nvidia, and OpenAI, with computing capacity

Additionally, As a result, the company has had to take on a lot of debt to purchase the GPUs to run its AI infrastructure, in light of current trends

Nevertheless, Furthermore, In the first quarter, the company reported an operating loss of $27. 5 million, but its interest expense was $263, in light of current trends. 8 million because it has $8, given current economic conditions. 7 billion in high-interest debt, in this volatile climate

Its interest rate is a reflection of the risk debt-holders see in the, as the company barely had any revenue two years ago, in this volatile climate

CoreWeave has several other risks, including high customer concentration

Last year, Microsoft made up more than half of its revenue, and a report that it was opting out of buying more data center capacity from CoreWeave helped put pressure on the IPO

It's also dependent on continuing growth in AI, and it needs to be able to turn a fit on the GPUs it buys before it has to replace them, given the current landscape

The is so new, and growing so quickly, that it's not if it will be able to do that, amid market uncertainty

Is CoreWeave a buy (noteworthy indeed), in this volatile climate

Nevertheless, Conversely, For the right kind of investor, CoreWeave looks a buy, despite the risks noted above

The company's soaring growth can't be ignored, and the cloud infrastructure model has been highly fitable for more-established companies Microsoft and Amazon

Given the growth opportunity in front of it, CoreWeave is unly to be fitable for years, and it could be years before the company even starts to imve its unit economics

Based on its revenue run rate, its price-to-sales ratio is 15, which seems pretty low for a company growing this fast

Moreover, For risk-tolerant investors interested in a pure-play AI stock, getting some exposure to CoreWeave makes sense, and dollar-cost averaging is a good way to do it (noteworthy indeed)

At this point, the stock is ly to continue to be volatile, and there should be more dips to capitalize on in the future (quite telling), in this volatile climate

John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors

Additionally, Meanwhile, Jeremy Bowman has positions in Amazon and Nvidia

Moreover, The Motley Fool has positions in and recommends Amazon, Microsoft, and Nvidia (noteworthy indeed)

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