CoreWeave shares fall as firm doubles AI spending budget

Shares of CoreWeave, Inc. Class A Common Stock fell approximately 12% in pre-market trading on Friday as the company's decision to double its capital expenditure raised concerns regarding profit margins and the efficiency of its artificial intelligence investments. The cloud infrastructure firm is dedicating substantial resources to building large-scale data centers powered by high-end chips from NVIDIA Corporation to meet the intensifying demand for AI-driven services.

CoreWeave has set a capital expenditure budget of $30 billion to $35 billion for the current year, more than doubling the $14.9 billion spent in 2025.

The increased spending will put some short-term pressure on the margins.

The company's aggressive investment strategy mirrors the actions of hyperscale cloud providers like Alphabet Inc. and Amazon.com, Inc., which have collectively committed over $600 billion toward AI infrastructure this year. However, unlike these tech giants that possess massive cash reserves, specialized neocloud providers are more vulnerable to market volatility. CoreWeave reported $3.13 billion in cash and equivalents, a sharp contrast to the $86.8 billion held by Amazon or the $24.3 billion reported by Microsoft Corporation.

Other players in the sector are following a similar path. Amsterdam-based Nebius Group N.V. recently reported a significant rise in capital spending, reaching $2.1 billion in the December quarter compared to $416 million in the previous year. These neocloud companies provide hardware and cloud capacity as specialized services to other technology firms.

Industry analysts also warned that the rapid expansion of data centers could strain the availability of critical semiconductors. Any disruptions in the supply chain could potentially delay CoreWeave's infrastructure projects and lead to a backlog of unfulfilled revenue.