CoreWeave (CRWV) stock has declined more than 45% over the past month, following one of the most successful market debuts in 2025. Despite the artificial intelligence (AI) boom, CoreWeave stock should be approached with caution for three key reasons, including high debt levels, heavy customer concentration, and risks related to capital-intensive expansion and valuation.
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CoreWeave is an AI cloud computing company specializing in cloud-based graphics processing unit (GPU) infrastructure for developers and enterprises. Recently, enthusiasm around AI has waned as concerns grow about returns on hefty AI investments and inflated equity valuations, suggesting a possible bubble.
Here Are the Three Reasons to Be Cautious
1. High Debt Levels and Mounting Losses – CoreWeave has accumulated a very high debt load, totaling around $14 billion as of September 30, resulting in an unsustainable debt/equity ratio. The company’s expenses have soared sharply, leading to consistent operating and net losses despite strong revenue growth. High interest expenses eat up much of CoreWeave’s revenue, while ongoing losses may force more share issuance or debt, threatening financial stability.
2. Customer Concentration Risk – Up to 77% of CoreWeave’s revenue comes from just two customers, namely Microsoft (MSFT) and OpenAI (PC:OPAIQ). This heavy reliance poses risks if key clients leave or renegotiate contracts. Most of CoreWeave’s contracts guarantee payment even if customers do not use full services, known as “take-or-pay.” However, as the AI market grows, clients may push for more flexible deals, which could make future revenue less predictable and more unstable.
3. Capital-Intensive Growth and Valuation Concerns – CoreWeave operates a capital-intensive data-center business requiring massive investments, with expectations of $20 billion to $23 billion in capital expenditures this year alone. Delays, supply chain issues, and construction challenges add further risk. Moreover, CoreWeave’s market valuation is very high relative to its book value, especially versus peers such as Amazon (AMZN), making it a risky investment.
To conclude, while CoreWeave benefits from strong growth opportunities in the AI infrastructure sector, significant leverage, customer dependence, and ambitious expansion plans raise cautionary flags.
Is CRWV a Good Stock to Buy?
Due to these reasons, analysts remain divided on CoreWeave’s long-term outlook. On TipRanks, CRWV stock has a Moderate Buy consensus rating based on 12 Buys, 11 Holds, and one Sell rating. The average CoreWeave price target of $148.32 implies 99.7% upside potential from current levels.
