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'splan 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)
