Natural disasters and man-made disasters strike! CoreWeave (CRWV.US) AI Data Center Project Delays Computing Power Production Capacity Delivery Blocked and Operational Vulnerabilities Revealed

The Zhitong Finance App learned that according to people familiar with the matter, the torrential rain in Texas earlier this year delayed the construction of a key artificial intelligence data center at CoreWeave (CRWV.US), a leader in cloud AI computing power leasing, causing its completion date to be delayed by several months. According to reports, a construction site in Denton, Texas was delayed for about 60 days due to torrential rain and high winds, so the contractor was unable to pour concrete for the complex. The data center cluster will provide approximately 260 megawatts of computing power, which CoreWeave plans to lease to OpenAI. Additionally, revisions to some data center design drawings built by partners in Texas and elsewhere have led to other delays.

On the earnings call last month, CoreWeave CEO Michael Intertrato mentioned “temporary delays due to delays in progress by third party data center developers.” He then talked about “a problem in one data center” affecting the company, but emphasized that “we have 32 data center projects, all of which continue to progress to varying degrees.” CoreWeave CFO Nitin Agrawal later clarified that the delay was only related to a single data center vendor partner.

CoreWeave's third-quarter revenue performance exceeded expectations, but full-year results guidance fell short of market expectations. According to the data, this AI infrastructure service provider achieved revenue of 1.36 billion US dollars in the third quarter, a sharp increase of 134% over the previous year, higher than the general market forecast of 1.29 billion US dollars. Despite strong quarterly results, the company's management set the full-year revenue forecast range of 5.05 billion to 5.15 billion US dollars, which fell short of analysts' forecasts of 5.29 billion US dollars. The reason the performance guidance fell short of expectations was due to delays in construction by third-party data center developers. Due to a problem with a data center supplier, production capacity construction was delayed, resulting in the revenue originally scheduled to be confirmed in the third quarter being postponed to the first quarter of next year, while the company's GPU launch capacity target was lowered from “over 900 megawatts” to 850 megawatts.

However, some analysts believe that the root cause is that CoreWeave management focused too much on the acquisition of CoreScientFIC, which led to a lack of focus on implementing delivery promises to customers. The acquisition was announced at the beginning of the third quarter, but shareholders rejected it at the end of the quarter. Operational risks arising from this process eventually led to delays in production capacity construction, resulting in a revenue gap of about 200 million US dollars this year.

At the profit level, CoreWeave's net loss narrowed from $360 million in the same period last year to $110 million. Management anticipates that most construction delays will be resolved by the first quarter of 2026. To reduce reliance on external developers, CoreWeave is building its own data center in Pennsylvania to strengthen direct control over the progress of the project.

Chief Financial Officer Nitin Agrawal said that in 2026 the company's capital expenditure will easily double this year ($12 billion to $14 billion). Meanwhile, CoreWeave continues to expand its electricity production capacity. Currently, the contracted power capacity has reached 2.9 gigawatts, which is a significant increase from 2.2 gigawatts three months ago.

CoreWeave's core business is leasing Nvidia chips to AI R&D companies. Customers include large cloud service providers such as Google (GOOGL.US) and Microsoft (MSFT.US). This business model has proven to be very effective, and the company won a number of major contracts in the third quarter: OpenAI expanded its partnership by $6.5 billion, while Meta (META.US) signed a six-year agreement with a potential value of $14.2 billion.

However, CoreWeave just experienced a nightmarish quarter. Market concerns about the artificial intelligence bubble and the company's own operational problems erupted, causing the stock price to drop more than 47% in the third quarter. The existential crisis of its second-largest customer, OpenAI, has put pressure on the world's largest new cloud service provider at the level of a “red alert”.

CoreWeave's profitability is the focus of investors. The company's gross margin has stabilized at around 74%, but GAAP operating margin has declined to 4.3%. Profit margins are expected to remain under pressure, but the focus is on no significant losses. The company needed to rebuild market confidence by demonstrating an increase in backlog orders, expanding revenue, and stabilizing gross profit.

Additionally, CoreWeave is bearing a significant increase in debt levels — up to $18.8 billion, which poses substantial risks. The company's management is aware of the risks posed by its debt and the consequences of the current “red alert” moment. Building data center capacity at the current rate is capital intensive and will require additional funding. For example, if CoreWeave issues an additional $2 billion in convertible bonds as per their recent plan, they will accumulate more than $20 billion in debt in the fourth quarter. The company's management must steer the company towards profitability, but the first step in achieving this goal is to deliver previously promised capacity and achieve revenue growth.