CoreWeave shares slump as doubling capital expenditure sparks margin concerns

By Zaheer Kachwala

Feb 27 (Reuters) - ‌Shares of CoreWeave ​slumped ​around 15% on Friday, after the company's plans to double capital expenditure this year stoked investor concerns about margin ‌pressure and effective returns from its artificial intelligence push.

If current ⁠losses hold, CoreWeave is set to shed more than $8 billion from its market ‌value.

The cloud infrastructure company has ‌committed significant capital toward the construction of large data centers filled with top-of-the-line Nvidia chips to capitalize on the booming demand for ​AI services.

CoreWeave has budgeted $30 billion to $35 billion in capital expenditure this year, more than double the $14.9 billion it spent in 2025. The ⁠increased spending will put some "short-term pressure on the margins," the company said.

"The share price reaction ​suggests that while markets understand CoreWeave's plan to accelerate spending, and prioritize speed to, and share of, market, they are ​concerned about the long-term economics and ‌how the company plans to fund the investment," said Russ Mould, investment director at AJ Bell.

The company's ballooning ⁠spending mirrors that of hyperscale cloud providers such as Alphabet's Google and Amazon , which have collectively committed more than $600 billion this year for AI infrastructure buildouts.

However, ⁠unlike these Big Tech companies, neoclouds such as CoreWeave and peer Nebius lack ​the massive cash reserves, exposing them to significant market downturns.

CoreWeave had $3.13 billion in cash and its equivalents, compared with Microsoft's $24.3 billion and Amazon's $86.8 billion, according to their ‌most recent earnings reports.

Amsterdam-based Nebius earlier this month reported a sharp rise in capital spending to $2.1 billion ‌in the December quarter from just $416 million in the prior year period.

Neoclouds ⁠offer hardware and cloud capacity ‌as services to other ​tech firms, usually by providing access to high-quality processors and cloud infrastructure.

(Reporting by Zaheer Kachwala in Bengaluru; Editing by ‌Leroy Leo)

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