The Neocloud Revolution Is Here. This AI Stock Went From Zero to $5 Billion in Revenue in 3 Years.

“Neocloud” is one of those buzzy tech industry words that not every investor is aware of. That’s a shame, because the technology – cloud computing services that are focused chiefly on artificial intelligence (AI) – has enormous potential, to say the least.

And within the still-limited neocloud space, one enterprise that’s helping to lead the march forward is CoreWeave (CRWV 1.86%). Its rise has been fast and impressive; here’s a look at whether it still has room to run.

One hot core

Underneath all the sophisticated, whiz-bang technology that CoreWeave leverages, its business strategy is refreshingly straightforward.

Image source: Getty Images.

The company operates a network of “AI factories.” These are leased or owned data centers that are mainly packed with the state-of-the-art AI processors and integrated clusters of its business partner (and investor, and customer), Nvidia.

This hardware makes up the brains that can handle resource-intensive AI functions, and CoreWeave leases out that computing capacity to clients.

One healthy sign of a thriving tech business is its use by major companies in the sector – and CoreWeave absolutely checks that box. It has a relatively long relationship supplying such computing power to **Microsoft **for that company’s Azure AI and for ChatGPT developer OpenAI (a beneficiary of considerable investments from Microsoft).

In the social media sphere, Facebook and Instagram owner Meta Platforms signed a deal to use the Nvidia GB300 systems in CoreWeave’s AI factories to help forge – sorry, develop – its own Llama AI platform. This arrangement, by the way, is quite the long-term money spinner all on its own. It’s worth more than $14 billion, and it will be in force through 2031.

Thermostat-melting

CoreWeave’s services are hot, and their temperature will keep rising. That thermostat was turned up quickly: The company’s 2022 revenue was a skinny $16 million, but a mere two years later, that number had ballooned to over $1.9 billion. The fourth-quarter and full-year 2025 results will come out on Thursday after the closing bell, and the consensus analyst revenue estimate for the latter tops $5 billion.

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NASDAQ: CRWV

CoreWeave

Today’s Change

(-1.86%) $-1.82

Current Price

$96.19

Key Data Points

Market Cap

$51B

Day’s Range

$95.13 - $100.76

52wk Range

$33.52 - $187.00

Volume

543K

Avg Vol

27M

Gross Margin

49.23%

The world wants CoreWeave to build out its capacity as much and as soon as possible, but doing so takes time and capital. One result of this is that the company has a rapidly growing revenue backlog; it skyrocketed by 271% year over year in the third quarter to more than $55 billion.

The company has yet to post a net profit; however, this is hardly a deal-breaker for the stock’s many bulls. It’s common in the tech industry for a business to invest significant capital to build scale and establish a strong revenue base. When and if that’s done sufficiently, such businesses can start to flip those bottom-line numbers into the black, hopefully at high margins.

Causes for concern?

So, I wouldn’t say CoreWeave’s losses are worrying, at least not yet. In fact, they’re fairly modest given the sharp upward trajectory of its revenue.

And the company’s third-quarter deficit of $110 million was its lowest across the past five quarters (the deepest being $360 million in Q3 2024). Meanwhile, across that stretch of time, its revenue climbed from $584 million to nearly $1.4 billion.

None of this is to say that CoreWeave has had no setbacks or concerns. Last week, an article published by Business Insider stated that one of its creditors, business development company Blue Owl Capital, was apparently struggling to syndicate debt to fund a CoreWeave data center in Pennsylvania. Since data centers are front and center in the company’s business, that was hardly an encouraging development.

Speaking of debt, CoreWeave sure is amassing a lot of it. Its long-term borrowings are rising more quickly than revenue, piling up almost threefold over the one-year stretch between the third quarters of 2024 and 2025 to more than $14.7 billion. As with any growing stack of loans, that debt threatens to become a serious drag on the company’s fundamentals.

Still, this is a business that – more than many – is in the right place at the right time in the history of technology. I doubt the mania for everything AI will subside soon, and CoreWeave is already a go-to choice for smart information technology managers to secure the processing power they need. CEO Michael Intrator insisted its Pennsylvania facility is fully funded, and I’d say the company’s debt pile is manageable (at least for now). This is a fine stock for the dawn of the neocloud age.

Since CoreWeave is still a relatively young company, it will be important for investors considering buying its shares to digest all updates regarding the developments and factors covered above. Management is slated to publish its final set of 2025 results on Thursday after the close of trading.