CoreWeave's stock climbed 15% in pre-market trading Wednesday after the Nvidia-backed cloud provider lifted its full-year sales outlook, even as it flagged that quarterly interest expenses could reach $1.15 billion. The company reported a 168% jump in third-quarter revenue to $3.66 billion and a record backlog of $132.5 billion, signaling that demand for AI computing remains robust.
Why CoreWeave's borrowing costs keep rising
CoreWeave expects fourth-quarter interest expense of $1.05 billion to $1.15 billion, following net interest expense of $846 million in the three months to September. While revenue growth has improved operating performance—quarterly operating income reached $207 million, up from $52 million a year earlier—net interest expenses were more than four times that figure, pushing the company to a $709 million net loss, compared with a $110 million loss in the prior-year period.
The pressure reflects the scale of its expansion. CoreWeave is purchasing computing equipment and securing data-center capacity before all associated customer revenue arrives. Management notes that its average debt cost actually fell to 7.9% from a year earlier, but the volume of financing required has ballooned.
A $9 billion funding plan offers some relief
CoreWeave expects about $9 billion in customer prepayments and deposits over the next three months, providing an alternative to traditional borrowing. It is also pursuing loans secured against computing equipment and customer contracts. The Financial Times reported that a proposed multibillion-dollar facility backed by Nvidia chips could carry interest of about 7% to 7.5%, below yields on some unsecured debt.
John Blank, chief equity strategist at Zacks, told CNBC that the shift away from unsecured funding has helped restore investor confidence after the stock's steep decline. However, the new loan has not been completed, and the expected customer payments have not all arrived. Even cheaper loans would leave CoreWeave funding a massive construction program, with 2026 capital expenditure forecast at $37 billion to $39 billion.
Can record demand translate into lasting profits?
CoreWeave's backlog rose from approximately $104 billion at the end of June, and management says demand for computing capacity is roughly ten times available supply through 2027. Deutsche Bank analyst Brad Zelnick argued in an earlier assessment that financing worries had overshadowed CoreWeave's customer relationships, committed sales, and software capabilities.
Management now expects adjusted net losses to narrow in 2027 and positive adjusted net income in the first half of 2028. The immediate test is whether expanded capacity produces enough cash to service borrowings.
This article is for informational purposes only and does not constitute financial advice.
