CoreWeave's 73% Rally Looks Like a Shakespeare Bust Waiting to Happen

When CoreWeave (NASDAQ: CRWV) went public in 2025, it became the year’s darling AI stock, jumping over 70% in just months. But beneath the surface, this IPO tells a cautionary tale—one that investors might recognize as a classic overture to disaster.

The Seductive Numbers That Got Everyone Excited

Let’s start with what caught investors’ attention. CoreWeave’s business model is straightforward: build GPU-equipped data centers and rent computing capacity to hyperscalers like Microsoft and Meta Platforms. The results look phenomenal on paper.

Revenue has exploded by more than 230% year-over-year, reaching $4.3 billion across the last four quarters. The company boasts a $55.6 billion revenue backlog, giving it what appears to be a multi-year runway of guaranteed work. Against the backdrop of the AI boom, where demand for computing capacity supposedly outpaces supply, CoreWeave seemed positioned to print money for years.

The parallel to the late 1990s dot-com era is hard to ignore—technology, hypergrowth, euphoric investors, and seemingly unlimited funding all lined up perfectly.

Here’s Where the Plot Takes a Dark Turn

The problem is that explosive growth is masking a financial catastrophe. CoreWeave is burning through cash at an alarming rate, posting a negative free cash flow of $8 billion over the past four quarters. In other words, the company is losing nearly twice its annual revenue in actual cash.

To fund this hemorrhaging, CoreWeave has borrowed aggressively. Long-term debt has skyrocketed from essentially zero to $18.4 billion in less than a year. The company is trapped in a vicious cycle: it must spend and borrow relentlessly to achieve growth, but growth alone doesn’t guarantee profitability.

That $55.6 billion backlog? It won’t be easy money. Fulfilling it will require continued massive capital expenditures and borrowing, keeping the company in negative cash flow territory.

The 2026 Reckoning Approaches

As the initial AI excitement begins to cool, investors are finally asking the uncomfortable question: when does CoreWeave actually make money?

With free cash flow firmly in negative territory, the company will likely continue issuing debt and diluting shareholders through stock offerings. Share dilution spreads profits across an ever-expanding shareholder base, dampening returns. Meanwhile, CoreWeave’s $18.4 billion debt load already represents roughly one-third of its enterprise value—a troubling level of leverage.

Oracle serves as a cautionary precedent; excessive borrowing can severely constrain a stock’s performance. Unless CoreWeave demonstrates a credible path to profitability soon, the weight of its financial obligations could trigger a significant correction heading into 2026.

The Shakespeare bust of AI stocks may not be Netflix or Nvidia. It might very well be the hottest IPO that couldn’t sustain its own growth economics.

For investors, the prudent move is caution. The spectacular 73% gain already captured the optimism. What comes next is likely to be far more painful.