Alright, let's cut the crap. Every time the AI hype train chugs along, some new company gets strapped to the front like a hood ornament, and right now, that company is CoreWeave. On Monday, they’re going to get on a call and tell everyone how amazing things are. The stock might even pop. But I’ve been staring at their financials, and I have to ask: are we all just collectively agreeing to ignore reality?
You’ve got this massive, $1.6 billion data center in Plano, Texas, humming away, a temple built to the gods of AI. It’s supposed to be the engine room of the future. But the company running it, CoreWeave, looks less like an engine and more like a car held together with duct tape and payday loans, doing 120 mph straight towards a brick wall.
Their stock is up 160% since the IPO in March. Great. Fantastic. But their balance sheet tells a story that’s a whole lot less rosy. This isn't just a company with some debt. This is a company literally built on a mountain of it. And that mountain is casting a very, very long shadow.
A House Built on IOUs
Let’s talk numbers, because they don’t lie, even if the PR people do. CoreWeave has $11 billion in total debt. Of that, a cool $7.6 billion is listed as "current liabilities," which is finance-speak for "bills we have to pay within a year."
Now, you might think, "Okay, big tech companies have big debt." Sure. But those companies also have big revenue. CoreWeave’s revenue in 2024 was $1.9 billion. You don’t need a Wharton MBA to see the problem here. That ain't a sustainable business model; it’s a ticking time bomb.
It’s like they’re trying to pay off a mortgage with the money they find in the couch cushions. This is a bad idea. No, 'bad' doesn't cover it—this is a five-alarm dumpster fire of a financial strategy. They’re borrowing money at interest rates between 9% and 15%—rates that would make a loan shark blush—at a time when investment-grade debt is closer to 6%. Who in their right mind lends this kind of cash to a company that lost over $600 million in the first half of this year alone? What’s the real game here?
The whole thing is a high-wire act. They’re betting that future revenue from the AI boom will come in so fast and so huge that it’ll cover this chasm of debt before they fall in. It’s the corporate equivalent of taking out a title loan on your car to bet it all on a single horse race. If the horse wins, you’re a genius. If it doesn’t, well, you’re walking home.
The Gospel of 'Future Revenue'
The bulls, offcourse, will point to the "Remaining Performance Obligations," or RPOs. That’s the $30 billion in contracts they’ve signed but haven’t been paid for yet. It’s their holy grail. "See?" they shout. "The money is coming! This is the next Amazon Web Services! They’re selling the picks and shovels in the AI gold rush!"
Give me a break.
First off, a huge chunk of that future money is tied to a handful of customers. A staggering 71% of their revenue last quarter came from one company: Microsoft. Yes, that Microsoft. The one with a credit rating better than most countries. They’ll pay their bills. But they’re also spending tens of billions to build their own data centers. So what happens in a few years when Microsoft’s contract is up and they decide they don’t need the training wheels anymore? Does 71% of CoreWeave’s business just... evaporate?
The company says it has long-term, "take-or-pay" contracts, which sounds secure. But I’ve been around long enough to know that in tech, "long-term" means "until something better or cheaper comes along." These contracts are only as good as the customers who sign them, and a lot of their other clients are cash-burning AI startups like OpenAI, which is making its own multi-hundred-billion-dollar promises all over town. If that house of cards wobbles, who do you think gets paid first? The little guy renting out GPUs, or the giants like Oracle and Nvidia?
They expect us to believe this is all part of a hyper-growth plan, and honestly...
Then again, maybe I'm the crazy one here. The stock is soaring, analysts are rating it a "buy," and they keep signing massive deals. Maybe believing in old-fashioned things like "positive cash flow" and "not being existentially dependent on one customer" is just boomer thinking in the new AI economy.
...So We're All Just Pretending This Is Fine?
When CoreWeave gets on that earnings call Monday, they’ll talk about growth. They’ll talk about RPOs. They’ll talk about the endless demand for AI compute. They will say everything except the quiet part out loud: that their entire existence is a bet, funded by expensive debt, that the AI gold rush never, ever ends.
This isn’t a story about technology or innovation. It’s a classic bubble story. It’s about cheap capital chasing a hot trend, creating a company that looks invincible on the surface but is terrifyingly fragile underneath. Kerrisdale Capital, which is shorting the stock, called CoreWeave the "poster child of the AI infrastructure bubble." I can’t find a single reason to disagree.
This isn't building the future; it's just renting it on a credit card with a killer interest rate. And sooner or later, that bill always comes due.
