4 Reasons Not to Buy the Dip in CoreWeave Stock | Colorful fool

Actions from CoreWeave (CRWV +4.21%) recently formed craters. At the time of writing, they are down more than 60% from the 52-week high of $187 reached earlier this year.

The drop in shares comes amid a broader decline in many AI-related names, as investors worry whether today’s boom in building artificial intelligence could soon peak. As a cloud infrastructure company directly tied to an aggressive AI build, CoreWeave’s stock has been hit harder than some of the more diversified tech companies in the space.

The pullback in CoreWeave stock may tempt some investors to buy into the growth story at these lower prices. But is it really a bathing moment? Or is the stock’s decline a sign of some deep underlying risks, ultimately showing why investors may want to stay away from CoreWeave stock?

Unfortunately, I think the latter is closer to reality. Here are four reasons why I would stay away from the stock even though the market offers a much lower entry point.

1. CoreWeave is still losing money

CoreWeave’s top line is exploding, but its losses are huge. According to its S-1 filing, revenue for the year ending December 31, 2024 rose to about $1.9 billion, up from $229 million in 2023, yet the company posted a net loss of $863 million in 2024 and $594 million in 2023.

The first half of 2025 did not reverse this trend. In the first quarter of 2025, revenue jumped 420% year-over-year to about $982 million, but CoreWeave posted a net loss of about $315 million. In the second quarter of 2025, revenue climbed back to $1.21 billion, up from $395 million a year earlier, but the company still lost roughly $291 million.

And even though quarterly revenue came in at $1.36 billion in Q3, CoreWeave still reported a net loss of $110 million.

CoreWeave shows that the demand for AI is real, but achieving significant profitability (especially relative to the $35 billion market cap) is still a distant goal.

2. Customer concentration is extreme

Perhaps the biggest risk for CoreWeave is customer concentration. The company’s S-1 filing reveals how dependent the business is on a small group of very large customers. In 2024, the company generated 77% of its revenue from its two largest customers, and its largest customer alone accounted for 62% of revenue.

3. Capital needs remain high

AI infrastructure is extremely capital intensive, and CoreWeave’s financial results show just how challenging this model can be. In 2024, net cash used in investing activities reached approximately $8.7 billion, driven largely by capital investments in GPU fleets, networking hardware and data center build-outs. In the first nine months of 2025 alone, the company spent more than $6.2 billion on property and equipment — again financed largely through debt and other financing.

These expenses left the balance sheet highly leveraged. As of Q3, CoreWeave carried $14 billion in debt between current and long-term borrowings. Net interest expense for the first nine months of 2025 was more than $841 million – a sharp increase from the previous year.

Today’s Change

(4.21%$3.00

Current price

$74.29

Key data points

Market capitalization

37 billion dollars

Daily range

$72.85 -$76.60

Range 52 weeks

$33.52 -$187.00

Volume

29 million

Avg. flight

31 million

Gross margin

49.23%

Dividend yield

ON

4. Expensive appreciation

Even after the recent selloff, CoreWeave stock doesn’t look cheap compared to current fundamentals.

Management’s guidance from earlier this year called for 2025 revenue of $5.15 billion to $5.35 billion, and that forecast has already been cut. Management now calls for full-year sales of $5.05 billion to $5.15 billion. While sales still top $5 billion, the stock is trading at roughly seven times this year’s expected sales, despite persistent losses under generally accepted accounting principles (GAAP) and a capital structure that relies on heavy borrowing.

That’s a steep valuation for a tech company with extreme customer concentration, a lot of debt and no profits — not to mention that the company’s business model is heavily dependent on an artificial intelligence boom that’s hard to predict.

For these reasons, I’ll stay away even though CoreWeave stock is trading significantly lower than it was a few months ago.