Neocloud infrastructure darling CoreWeave Inc. delivered an impressive revenue beat and raised its full-year guidance today as it demonstrated that demand for artificial intelligence computing remains strong, pushing its stock higher in late trading.

The report comes at a prickly moment for the AI industry as investors increasingly sour on heavily indebted cloud infrastructure startups, while the broader market continues to get to grips with the spy scandal surrounding Nvidia Corp. Chief Executive Jensen Huang.

The company reported a third-quarter loss before certain costs such as stock compensation of $1.27 per share, trailing Wall Street’s target of a $1.16 per share loss, but the 168% growth in revenue meant sales came to $3.66 billion, topping expectations of $3.55 billion. All told, CoreWeave reported a net loss in the quarter of $709 million, rising from a $110 million net loss in the same period one year earlier.

Investors will have been pleased with CoreWeave’s guidance, though. Company executives said they’re now looking for between $1.275 billion and $1.375 billion in adjusted operating income and $13 billion to $13.3 billion in revenue for the full year. Wall Street analysts are looking for just $1.07 billion in adjusted operating income and $12.86 billion in total sales. CoreWeave’s forecast is notably much higher than the $960 million to $1.15 billion in adjusted operating income and $12.4 billion to $13.2 billion in revenue it had forecast three months earlier.

The report was well received by investors, as CoreWeave’s stock climbed more than 5% in late trading, helping to put the brakes on a slide that has seen the company lose more than 40% of its value over the last month. Many investors have sought to abandon stocks that are closely tied to the AI infrastructure buildout amid fears that rising interest rates have made capital much more difficult to come by. Recently, some CoreWeave bond yields have topped 16%.

CoreWeave Chief Executive Michael Intrator (pictured) told analysts on a conference call that most of the company’s capital requirements in fiscal 2027 will be sourced from clients via pre-payments on infrastructure services and from hardware partners such as Nvidia. He added that the company will also seek to raise a “limited amount” in outside funding.

When pressed on this, CoreWeave’s finance chief Nitin Agrawal said the company plans to raise new debt that will be tied to a set of contracts. “At current yields we do not intend to issue additional parent-level unsecured debt through 2027,” he told analysts. “By contrast, the asset-level secured debt market has remained stable, with our loans continuing to trade around par value.”

CoreWeave, along with other neoclouds like Nebius Group N.V., which is set to report its own earnings results on Thursday, has become increasingly reliant on its hardware partner Nvidia as a major benefactor. Nvidia provides CoreWeave with not only the graphics processing units needed to populate its data centers, but also much of the capital it needs to procure those chips, essentially recycling the money it earns throughout the AI economy in order to keep everything ticking over. But investors have become concerned about the long-term viability of what looks like an increasingly circular economy, and Nvidia’s stock has struggled to maintain momentum this year.

With this week’s revelations that Nvidia boss Jensen Huang had an affair with a suspected Chinese spy, the chipmaker’withs stock has lost almost 10% of its value to start the week. Nvidia’s board of directors has responded by launching an internal investigation, hiring the services of the high-profile legal firm Wachtell, Lipton, Rosen & Katz to look into Huang’s personal life and determine if any company or national security secrets were compromised.

The fallout from that probe will likely have a strong bearing on CoreWeave’s fortunes going forward, as will next week’s widely anticipated initial public offering from AI leader Anthropic PBC. In an update to its IPO prospectus earlier today, the model maker said it’s hoping to achieve a $1.4 trillion valuation through its share sale.

In the meantime, CoreWeave continues to forge ahead with its buildout. During the quarter it said it’s planning to build its first data centers in Asia. It also announced a new cloud-based service called Forge for running and evaluating AI models. The company said it hopes to have 1.85 gigawatts of active compute power in service by the end of the year, and anticipates its capital expenditure will reach between $37 billion and $39 billion. That’s more or less in-line with the Street’s forecast of $37.69 billion in capex this year.

At the end of the quarter, CoreWeave’s total debt was approaching $47 billion. Like its much larger peers in the cloud computing industry, such as Amazon Web Services Inc., Microsoft Corp. and Oracle Corp., CoreWeave is racing to add more compute capacity to serve its clients, but there are signs it may struggle to do this in the U.S. Last week, American voters either backed restrictions on data center construction or rejected pro-data center development measures in 40 out of 41 states.

Intrator addressed concerns about this in the conference call, insisting that he wasn’t overly concerned. “If data center construction across the sector were to slow, installed compute becomes scarcer and the knock-on effect is that GPU pricing may stay higher for longer,” he said.

In the meantime, CoreWeave continues to see demand for cloud compute escalate, and is now sitting on a massive $132.5 billion revenue backlog, Intrator said. That’s up from just $104 billion three months earlier.

Photo: Bloomberg Live/YouTube