CoreWeave stock price continued its strong bull run this week, reaching its highest point since October last year, and signs are that the uptrend will continue when it releases its earnings today.
The CRWV share price jumped to $137, up sharply from the year-to-date low of $64, where it formed a double-bottom pattern.
CoreWeave to publish strong financial results
The CRWV stock price continued its strong bullish trend, helped by the ongoing robust spending in the artificial intelligence industry.
Focus now shifts to the upcoming financial results, which will provide more information about its business.
There are signs that the company is doing well, with its revenue growth accelerating.
Together with Nebius, the company has become a duopoly in the neocloud industry, attracting large deals from the biggest companies in the sector like Microsoft, OpenAI, Perplexity, Meta Platforms, and Anthropic.
CoreWeave recently reached a major partnership with Anthropic, which will use its data centers to train its AI models. While the amount involved was not mentioned, chances are that it will be worth billions of dollars.
There are also signs that some of its existing customers will continue boosting their packages.
A good example of this is Meta Platforms, which reached a $17 billion deal with it last year and boosted it to $21 billion recently.
CoreWeave made over $5.1 billion in the previous quarter, up by 168% YoY.
This revenue growth coincided with the surge in its backlog, which moved to $66.8 billion. Its adjusted EBITDA rose to $3.1 billion.
The most likely scenario is where the company’s backlog jumps to over $100 billion in the coming months.
Analysts expect the upcoming earnings to show that its revenue jumped by 100% to $1.96 billion.
Chances are that the real figure will be much higher than that, thanks to its recent deals. Its earnings per share (EPS) is expected to improve to minus $1.2.
Key challenges remain
Still, the upcoming earnings release will likely show that the company faces some major challenges.
First, the cost of doing business continues rising, especially in the memory chip industry.
As a result, companies have boosted their prices, which is affecting large operators of data centers.
A good example of this is the recent announcement that top companies will spend over $725 billion in capital expenditures this year.
While this is a big increase from the previous estimate of $650 billion, the reality is that most of the firms pointed to pricing issues.
The rising semiconductor prices means that its margins will likely be under pressure this year.
The other risk is its borrowing, which has gone parabolic in the past few months.
It ended the previous quarter with over $6.7 billion in current debt and $14.6 billion in non-current debt.
Its total liabilities have jumped to $45.9 billion from $16 billion a year earlier.
Still, these concerns are a bit exaggerated as the company will ultimately start to focus on profitability once the investing stage ends.
Also, the debt is used to buy chips, which are assets, whose value may remain elevated over time.
CoreWeave stock may hit an all-time high soon
CRWV stock chart | Source: TradingView
The daily chart reveals that the CRWV stock price has soared this year and is now at its highest level in months.
It has already surged above the key resistance level at $114.5, its highest point in January this year.
The stock continues to remain above the 50-day and 100-day Exponential Moving Averages, while the Relative Strength Index (RSI) has soared, a sign of the robust momentum.
Therefore, the most likely CoreWeave stock forecast is bullish, with the next important target being its all time high of $186. This target is about 35% above the current level.
On the flip side, a drop below the key support at $114 will invalidate the bullish outlook.
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