What's Up with CoreWeave, Meta, and Oracle Stock Slides?
As talk of an AI bubble intensifies, a handful of companies face tough questions—and an unfavorable response from investors.
Over the past month, CoreWeave (CRWV), Meta (META), and Oracle (ORCL) have seen their share prices plummet over market concerns about potential losses from exposure to AI startups, OpenAI in particular. These companies are spending big and/or taking on debt to satisfy a need for compute power that may lead to significant losses.
CoreWeave, for instance, has seen its stock lose over 45% of its value over the past month. Shares took a hit after the neocloud’s earnings announcement November 10, during which it lowered its revenue and capex guidance due to a supply chain delay in fulfilling a customer contract. CoreWeave also faced the failure of its attempt to buy Core Scientific (CORZ), another neocloud provider and supplier of resources to CoreWeave—and which some believe was behind the delay mentioned in the earnings report. None of this pleased investors. But there was also the matter of CoreWeave debt, which grew to $14 billion this quarter, up from $11 billion last quarter.
Analysts question the wisdom of this growing liability. “CoreWeave is the poster child for what’s wrong with the great datacenter buildout,” said Gil Luria, head of technology research at D.A. Davidson, on a recent call with BNN Bloomberg. He believes CoreWeave can’t succeed in balancing its growing debt against the sheer difficulty of building out datacenters, which has been demonstrated by the recent delays. This balancing act has CoreWeave on a downward trajectory, Luria believes.
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