104 Billion Reasons to Buy CoreWeave Stock

CoreWeave (NASDAQ: CRWV) has had a volatile year, as the bulls and bears engage in a bit of a tug-of-war. The detractors will point to soaring expenses and consistent net losses. But the bulls will argue that, given CoreWeave's position in the artificial intelligence (AI) cloud computing market, and the continued increase in AI infrastructure spending, the company could deliver excellent returns over the next five years. Based on CoreWeave second-quarter results, released on Aug. 11, the bulls may be right. The company's earnings report was full of bullish signs, and one number in particular should boost investors' confidence.

CoreWeave's backlog is soaring

CoreWeave went into its second quarter update with high expectations. The company's shares had been rising for a couple of weeks, likely due to perceived strength in the AI industry, with other companies in the field posting strong financial results. Thankfully, CoreWeave did not disappoint. The company's second-quarter revenue increased by 112.5% year over year to $2.6 billion. True, CoreWeave's operating loss of $49 million was worse than the $19 million operating income reported in the year-ago period.

It also reported a net loss per share of $1.14, significantly worse than the $0.60 loss per share recorded in the prior-year quarter. However, these metrics improved sequentially. In the first quarter, the company had an operating loss of $144 million and a net loss per share of $1.40. CoreWeave is investing significant sums to build AI computing capacity, and there are signs that these investments are justified.

CoreWeave reported a revenue backlog of $104 billion as of June 30, up 4.6% sequentially and rising 245.5% from the prior-year quarter. It's no wonder that the stock soared 20% on the heels of its quarterly update.

Where will the stock go next?

Eventually, AI infrastructure spending growth will slow, and so will CoreWeave's year-over-year top-line growth rates. There is another reason to be worried about the company's future: Significant customer concentration. During the company's fiscal year 2025, one customer accounted for 67% of its revenue. This is a meaningful risk investors will have to constantly monitor. However, even with those caveats, CoreWeave looks like an attractive stock to buy. Here's why.

Let's assume the company's revenue can grow at a compound annual rate of 45% over the next four years. CoreWeave's current price-to-sales ratio is 7.16; let's suppose it drops to 3 by the end of our period. Given these assumptions and the current stock price of about $107, CoreWeave's shares could be trading at roughly $198 in four years, for a return of about 85%.

How reasonable are our assumptions? Note that analysts expect CoreWeave to end 2026 with revenue of $12.63 billion, more than twice the $5.1 billion reported in the year-ago period. The average consensus for next year is $25.4 billion, about twice what it could generate this year. These are projections. Not actual results. However, several factors suggest the company may, indeed, maintain this pace. There is CoreWeave's own massive backlog of $104 billion, which grants it significant visibility into the next few quarters, at least.

There is also the fact that many companies are putting their money where their mouths are and doubling down on AI infrastructure spending. These include hyperscalers (major cloud computing leaders) such as Microsoft (NASDAQ: MSFT) -- CoreWeave's biggest client -- as well as Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) and Amazon (NASDAQ: AMZN), both of which recently increased their capex projections for fiscal year 2026.

So, considering there is a good chance CoreWeave doubles its annual revenue this year and the next, a 45% revenue CAGR through the next four years doesn't seem that far-fetched at all. The risks mentioned above are worth keeping in mind, but CoreWeave looks likely to deliver strong returns over the medium term. The stock is still a buy after its post-earnings surge.

Prosper Junior Bakiny has positions in Alphabet and Amazon. The Motley Fool has positions in and recommends Alphabet, Amazon, and Microsoft. The Motley Fool has a disclosure policy.