CoreWeave shares experienced a significant slump of approximately 12% following the company's announcement to double its capital expenditure this year. This aggressive investment strategy has ignited investor concerns regarding potential margin pressure and the ultimate returns from its artificial intelligence initiatives.
The cloud infrastructure firm is heavily investing in large data centers equipped with advanced Nvidia chips to meet the surging demand for AI services. CoreWeave has allocated between $30 billion and $35 billion for capital expenditure in the current year, a substantial increase from the $14.9 billion spent in 2025. The company acknowledges that this elevated spending will create "short-term pressure on the margins."
This substantial spending mirrors the investments made by hyperscale cloud providers like Alphabet's Google and Amazon, who are collectively committing over $600 billion to AI infrastructure buildouts. However, unlike these tech giants with vast cash reserves, emerging cloud providers such as CoreWeave and its peer Nebius face greater exposure to market downturns due to their business models.
CoreWeave reported $3.13 billion in cash and equivalents, a figure considerably lower than Microsoft's $24.3 billion and Amazon's $86.8 billion. Nebius, based in Amsterdam, recently disclosed a sharp rise in capital spending to $2.1 billion in the December quarter, up from $416 million in the prior year.
Neoclouds provide hardware and cloud capacity as services to other technology firms, often granting access to high-performance processors and cloud infrastructure. Furthermore, the rapid expansion of data centers could strain chip availability, potentially disrupting CoreWeave's infrastructure plans and leading to unfulfilled revenue commitments.