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Can CoreWeave's AI Boom Outpace Its Debt?
27 Sep
Summary
- CoreWeave's sales backlog nears $104 billion.
- Company holds $35.6 billion in debt as of June 30.
- UBS initiates coverage with a Buy rating and $120 target.
CoreWeave, a leading artificial intelligence cloud provider, is experiencing an overwhelming surge in demand, leading to a staggering sales backlog of nearly $104 billion as of June 30, 2026. This demand outstripped even the company's capacity, with over $25 billion in new customer commitments secured at the start of the third quarter. The company's infrastructure is rapidly expanding, with contractual power capacity reaching approximately 4.2 gigawatts by August 11, 2026.
This phenomenal growth comes with a significant financial burden. As of June 30, 2026, CoreWeave carries $35.6 billion in debt, accumulated through extensive investments in data centers, electricity, and Nvidia graphics processing units. The net interest cost alone was $640 million for the second quarter of 2026. This has raised concerns on Wall Street about whether the company's rapid AI expansion can outpace its substantial financing expenses.
Despite these financial risks, analysts like Karl Keirstead from UBS have initiated coverage with a Buy rating and a $120 price target. Keirstead suggests that market concerns regarding CoreWeave's leverage and credit risk may be reaching their peak, while the underlying demand for AI computing remains robust. The company reported second-quarter revenue soaring 112% to $2.58 billion, with adjusted EBITDA more than quadrupling. However, a net loss of $626 million was also reported for the same period, highlighting the intense capital requirements.
CoreWeave is actively exploring various financing avenues, including an $8.5 billion non-recourse loan secured by infrastructure and customer contracts. The company also recently closed a $4.2 billion issuance of convertible senior notes due in 2033. UBS projects that CoreWeave's revenue per gigawatt could eventually exceed $15 billion, a significant improvement that could bolster its profitability. The firm's client base is also diversifying, with recent deals including a $21 billion commitment from Meta and a multiyear agreement with Anthropic.
