CoreWeave jumps 26% after strong quarter and higher revenue outlook

CoreWeave shares jumped 26% on Wednesday after the neocloud reported third-quarter earnings that beat estimates and raised its guidance for the year. Revenue rose 168% to $3.7 billion for the three months to Sept. 30, which chief executive Michael Intrator called a breakout quarter. The move matters because CoreWeave has become a test of whether heavy spending on AI data centers can be financed without distress.

Why demand and financing drove the rally

Intrator told CNBC's Squawk on the Street that demand for the infrastructure is and remains overwhelming. He said the company is 10 times oversubscribed to existing capacity left in 2027 and multiples oversubscribed on capacity in 2028. Growth was supported by multiple sources of funding, including financing backed by customer contracts and around $9 billion in customer prepayments and deposits, he said on the conference call.

Neoclouds such as CoreWeave, Nebius and IREN have come under scrutiny this month as investors assessed the sustainability of the AI trade. CoreWeave sparked alarm when spreads on its credit default swaps widened past 11%, generally viewed as a distress level, while the price of its high-yield debt climbed. The company pointed to additional routes to finance its data center build-out with less alarming yields, which quelled investor concerns for the time being.

What cheaper debt means for households

Intrator told CNBC that asset-level debt has been rock solid through the episode and that enormous demand exists for that product. He said CoreWeave is about to launch another asset-level debt issue in the next week or two that has already been rated high investment grade. He expects it will be underwritten at 7% to 7.5% interest, which will bring down the average weighted cost of capital for the company and reduce reliance on unsecured bond financing.

CoreWeave expects $1.275 billion to $1.375 billion in adjusted operating income on $13 billion to $13.3 billion in revenue. Analysts surveyed by Visible Alpha were looking for $1.07 billion in adjusted operating income, while analysts polled by LSEG had expected $12.86 billion in revenue. The results lifted peers, with Nebius up 19%, Applied Digital up 9% and Iren up 8% in midday trading. Despite fears that recent midterm elections could restrict data center capacity, Intrator said he sees no impact on delivery of U. S. data centers required for the backlog.