Cloud computing provider CoreWeave is poised to unveil its third-quarter financial results this Monday after market close. Investors are keenly watching, as options market activity indicates potential for a substantial 14% fluctuation in the company's stock price by week's end. This anticipated movement could either propel shares to approximately $118.70, recouping recent tech sector losses, or depress them to around $89.30, a level not seen since early September.
CoreWeave's journey as a publicly traded entity has been marked by strong revenue growth, largely attributed to the burgeoning demand for AI-driven cloud computing services. However, its previous two earnings announcements since going public in March have been met with adverse market reactions. Following its May report, which showcased a remarkable 400% year-over-year revenue increase, shares experienced a slight dip. The August earnings, revealing a larger-than-expected loss, led to a more significant stock decline of over 20%. These past instances highlight a pattern where initial market enthusiasm, often driving stock surges pre-earnings, has not translated into sustained gains post-announcement.
A critical element shaping CoreWeave's current trajectory is the explosive growth in artificial intelligence. The company has secured impressive contracts in recent quarters, including a $14 billion agreement with Meta Platforms, a $6 billion deal with Nvidia, and a $6.5 billion expansion of its partnership with OpenAI, the creator of ChatGPT. These deals underscore CoreWeave's pivotal role in supporting the infrastructure for advanced AI applications, a sector experiencing unprecedented expansion. For the upcoming third quarter, analysts project CoreWeave will report a net loss of $284.4 million, a notable reduction from the $359.8 million loss recorded in the same period last year. Concurrently, revenue is forecasted to climb by 120% year-over-year, reaching an estimated $1.3 billion.
The market's mixed outlook for CoreWeave is reflected in analyst ratings. Half of the ten analysts tracking the stock recommend a 'buy,' while the other half advise a 'hold.' Their collective average price target of $158.83 suggests a potential upside of approximately 53% from the stock's closing price last Friday. This divergence highlights the uncertainty surrounding how investors will weigh the company's strong revenue growth and strategic AI partnerships against its ongoing unprofitability and previous post-earnings stock performance. The upcoming report will serve as a crucial indicator of Wall Street's prevailing risk appetite and the overall sentiment towards the burgeoning AI stock market.