In just the past month, this once-hot artificial intelligence stock has crashed more than 26%.
In just the past month, this once-hot artificial intelligence stock has crashed more than 26%.
A good way to gauge the excitement around artificial intelligence (AI) stocks is to simply look at CoreWeave (CRWV -0.92%) stock. The company makes money by renting out compute space and giving its customers access to Nvidia's cutting-edge AI chips. When the market is euphoric about AI, CoreWeave's generally doing fairly well. When it isn't, however, that's when the stock goes on a tailspin.
The risks and opportunities aren't complex with CoreWeave. The business has tremendous opportunities due to AI, but a high debt load and lack of profitability also lead many investors to think twice about how safe the stock really is. And it's the latter that appears to be weighing on its valuation right now, as rising bond yields and concerns about interest rates have resulted in the AI stock nosediving of late.
Rising interest rates could further cripple CoreWeave's stock
Last week, CoreWeave's stock fell below $60, as it hit a new 52-week low of $59.51. Many AI stocks have been struggling this month, but CoreWeave has been among the worst. Heading into trading this week, it was down 26% over the past month. Concerns that the war in Iran isn't ending anytime soon and that inflation may remain elevated, potentially leading to an increase in interest rates, appear to be weighing on the stock.
These developments are concerning for CoreWeave, as its debt load is high and the business is unprofitable, and thus it may need to continue raising more money to fund its growth. When it last reported earnings in August, its net loss totaled $626 million, and a big reason was its massive interest costs, which totaled $640 million. Higher interest rates may spook investors further, raising doubts about whether the tech company has a path to profitability.
$60.83-$0.57 (-0.92%)
NASDAQ · As of 2:58 PM ET 10/19/26
Why I wouldn't bother with CoreWeave
CoreWeave has a close relationship with Nvidia, which has certainly helped the business, but its financials aren't strong, and it doesn't have a robust competitive advantage that makes it likely to recover from any market downturn. There's ample risk with the stock, especially if demand for AI investment slows, which could happen if the cost of capital rises due to higher interest rates.
Averytin News Financial update.