CoreWeave Stock Hits Turbulence Monday: What's Going On?

CoreWeave Inc. (NASDAQ:CRWV) shares are trading lower Monday after reports that Microsoft Corporation (NASDAQ:MSFT), one of its top customers, is reassessing its relationships with neocloud providers, with earnings due Tuesday.

• CoreWeave stock is under selling pressure. What’s pulling CRWV shares down?

Microsoft Reportedly Reassess Neocloud Deals, Winds Down Oracle Arrangement

According to Bloomberg, Microsoft is winding down an arrangement to rent AI computing from Oracle Corporation (NYSE:ORCL), part of a larger reassessment of billions of dollars in cloud partnerships. Bloomberg, citing people familiar with the matter, reported that Microsoft has been turning off rented Oracle capacity in recent months after declining to renew the contract, because the hardware used older-generation Nvidia Corporation (NASDAQ:NVDA) chips that no longer fit its specifications.

Oracle said demand for its AI infrastructure remains strong. Bloomberg also reported that Microsoft has grown frustrated with neocloud providers over high costs and delays, including Nebius Group N.V. (NASDAQ:NBIS), IREN Limited (NASDAQ:IREN) and NScale, has tightened oversight of data center projects, and has debated internally whether to sign new neocloud deals. Microsoft has committed more than $80 billion to rent capacity from other cloud companies, Bloomberg reported.

Neocloud Stocks Enter Bear Market as Large Customers Focus on Cost Controls

CoreWeave and other top neoclouds have fallen as much as 70% from their highs this year. CoreWeave ended last week at $46.40, down 66% from its year-to-date high, while IREN has dropped 70%. Meta Platforms Inc. (NASDAQ:META), another top customer, is exploring leasing its extra data center space to other AI companies, and OpenAI is exploring ways to cut costs, which could lead to changes in its neocloud contracts. A key question is whether hyperscalers renew their leases when the contracts end.

Democratic Wins and Rising Bond Yields Are Also Weighing on the Group

According to CNBC, neocloud stocks have also been under pressure since the midterm elections, when Democrats won governors’ races in Georgia, Iowa, Nevada, Ohio and Texas and voters rejected data centers in all but one of 41 related ballot measures.

Yields on some CoreWeave bonds maturing in 2031 jumped above 16%, and the spread on its five-year credit default swaps, which are insurance against default, rose above 1,240 basis points, up 50% in the past month. CoreWeave had $5.5 billion in cash and $35 billion in debt at the end of June.

"We currently don’t anticipate any impact to CoreWeave’s existing customer commitments or associated backlog as a result of shifts in the political landscape," CoreWeave CEO Mike Intrator wrote on LinkedIn.

CoreWeave Signs Agreement with Wayve to Train Autonomous Driving Models

Separately, CoreWeave announced a multi-year agreement with Wayve, which builds the AI Driver for autonomous vehicles. Wayve will train its foundation models on CoreWeave Cloud using Nvidia Blackwell GPUs, expanding its infrastructure for training, evaluation and simulation.

Wayve began as a user of Weights & Biases, the AI developer platform CoreWeave acquired, and has now scaled up to CoreWeave Cloud. The companies didn’t disclose financial terms. "Being able to access CoreWeave’s AI cloud, purpose-built for workloads like ours, helps accelerate the commercial deployment of our AI Driver," said Silvius Rus, Wayve’s senior vice president of engineering.

CoreWeave to Report Third-Quarter Results Tuesday

CoreWeave is scheduled to report third-quarter earnings Tuesday, Nov. 10, after the market closes, with a call at 5 p.m. ET. Analysts estimate a loss of $1.16 per share along with revenue of $3.55 billion. For the prior quarter, CoreWeave reported an adjusted loss of $1.03 per share, beating the consensus estimate of a loss of $1.22, and revenue of $2.58 billion, beating the consensus estimate of $2.56 billion. CoreWeave guided to third-quarter revenue of $3.45 billion to $3.60 billion and adjusted operating income of $200 million to $260 million.

What to Watch: Microsoft Demand, Backlog Growth and Financing Strategy

Investors will be closely tracking any comments on Microsoft, given its role as a major customer, and on whether contracts will be renewed or expanded. Backlog will be in focus, after it reached $104 billion at the end of the second quarter. Financing will draw attention too. Morningstar analyst Luke Yang said he wants to see how management talks about closing its financing gap, since issuing equity is difficult with the stock beaten down.

Capital spending guidance of $35 billion to $39 billion for the year and third-quarter interest expense guidance of $860 million to $940 million will also be watched.

CoreWeave Shares Tumble

CRWV Price Action: At the time of publication, CoreWeave shares are trading 1.98% lower at $45.48, according to data from Benzinga Pro.

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