Shares of CoreWeave (WEAV) rallied sharply on Tuesday, climbing $10.24 to reach $116.95, as investors cheered the company's upcoming addition to the Nasdaq-100 index. The move, effective before the open on June 22, has triggered significant buying demand from exchange-traded funds (ETFs) and other index-tracking products. The stock hit an intraday high of $118.03, giving the AI infrastructure firm a market capitalization of approximately $61.6 billion.
Index Inclusion Fuels Rally
The Nasdaq-100 inclusion is a major milestone for CoreWeave, joining the ranks of Astera Labs, Nebius, Rocket Lab, and Teradyne in the prestigious index. According to Nasdaq, the Nasdaq-100 is tracked by more than 200 products and manages over $800 billion in assets worldwide. "This move reflects both our growth and the emergence of AI as one of the defining technologies of our time," CoreWeave CEO Michael Intrator said in a statement. The index addition is expected to drive further buying from funds and ETFs that track the Nasdaq-100, providing a sustained boost to the stock.
Revenue Backlog vs. Debt Load
Despite the bullish sentiment, analysts remain divided on CoreWeave's long-term prospects. Bulls point to the company's massive revenue backlog, which stood at $99.4 billion as of March 31. The backlog includes commitments from 10 customers each expected to spend at least $1 billion, with major deals from Meta, Anthropic, Jane Street, Cohere, Mistral, and others. First-quarter revenue more than doubled to $2.08 billion, up from $982 million a year earlier. Trefis analysts argue that the market may be underestimating the quality and concentration of these customer relationships.
However, bears highlight a daunting liability picture. As of March 31, CoreWeave's total liabilities reached $50.81 billion, comprising $7.55 billion in current debt, $17.31 billion in non-current debt, and $9.56 billion in non-current operating lease liabilities. The company's capital expenditures were equally staggering, with $7.70 billion spent on property and equipment in the first quarter alone. Louis Gerard, a Seeking Alpha contributor, maintained his Strong Sell rating on June 15, citing rising capital costs and margin pressure.
Costly Debt Financing
CoreWeave's recent debt offering underscores the high cost of its expansion. On June 11, the company priced $1.25 billion in 9.625% senior notes and €2 billion in 8.500% senior notes, both maturing in 2032. The proceeds are earmarked for general corporate purposes, including paying down existing debt. These elevated interest rates reflect the market's perception of risk, given the company's heavy reliance on debt to fund its AI infrastructure buildout.
Profitability Still Distant
While Wall Street forecasts robust revenue growth of 147% in 2026 and 97% in 2027, the path to sustainable profitability remains uncertain. CoreWeave continues to require fresh capital or additional debt to expand its data centers, and its operating expenses are climbing. The company's cash flow from operations has yet to turn positive, and its net losses have widened as it invests aggressively in capacity. Investors are left weighing the potential of its AI customer pipeline against the financial risks of its leveraged balance sheet.
Market Outlook
The debate over CoreWeave's valuation is likely to persist as the company navigates its growth trajectory. With the Nasdaq-100 inclusion providing a near-term catalyst, the stock may see continued support from passive inflows. However, the fundamental question remains: can CoreWeave's $99.4 billion backlog generate enough cash to service its $50.81 billion in liabilities and the high-cost debt needed to fulfill those contracts? The answer will determine whether the current rally is sustainable or just a temporary reprieve.
