Why did CoreWeave stock jump yesterday?
Shares of AI cloud provider CoreWeave jumped yesterday (Wednesday) by approximately 19%, bringing the company's market value to nearly $59 billion. The surge followed the release of second-quarter reports, which revealed a staggering figure: the company's backlog reached $104 billion, compared to about $30 billion last year. These are signed contracts that the company has yet to deliver, representing high demand for its cloud computing services.
Shares of AI cloud provider CoreWeave jumped yesterday (Wednesday) by approximately 19%, bringing the company's market value to nearly $59 billion. The surge followed the release of second-quarter reports, which revealed a staggering figure: the company's backlog reached $104 billion, compared to about $30 billion last year. These are signed contracts that the company has yet to deliver, representing high demand for its cloud computing services.
Contracts for eight years ahead
Demand for the company's services is far higher than its delivery rate. Second-quarter revenue more than doubled to $2.6 billion, and management now expects revenue of $12.4 to $13.2 billion in 2026. Against this forecast, the current backlog represents nearly eight years of operations. Contracts continue to flow, with Meta alone increasing its commitments by $21 billion, alongside new agreements with the AI lab Anthropic and the trading firm Jane Street.
To translate these contracts into actual revenue, CoreWeave needs extensive power and computing infrastructure. The company increased its active capacity to 1.5 gigawatts in the second quarter and is aiming for more than 1.85 gigawatts by the end of the year. However, the construction of data centers faces physical and political difficulties, such as an injunction imposed in New York on the construction of new centers, which makes the task more challenging for the company.
Heavy expenses erode profit
According to The Motley Fool magazine, building the infrastructure requires significant capital. CoreWeave increased its investment budget for 2026 to a range of $35 to $39 billion. To finance the purchase of Nvidia chips and other equipment, the company holds $35 billion in debt. Interest expenses for the quarter jumped to $640 million, more than double compared to last year, and are expected to reach an annual rate of about $2.6 billion — an amount higher than the annual operating profit forecast.
Because of this, despite the jump in revenue, CoreWeave's net loss widened to $626 million. The market is pricing in the gap between signing contracts and actual delivery, which includes years of construction, large investments, and heavy depreciation costs that begin the moment the equipment enters operation.
