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Today's Observation

CoreWeave has delivered a quarterly report that simultaneously verifies AI computing power demands and capital pressures. In Q3 FY2026, the company's revenue reached $3.661 billion, a year-on-year increase of 168%, exceeding market expectations of about $3.55 billion, and an increase of over $1 billion compared to the previous quarter. Adjusted EBITDA reached $2.256 billion, a year-on-year increase of 169%, with a corresponding profit margin of 62%; adjusted operating profit amounted to $379 million, with the operating profit margin improving from 5% in the previous quarter to 10%, reaching double digits a quarter ahead of schedule.

More importantly, CoreWeave's revenue backlog continues to expand. As of the end of September, the company's Revenue Backlog reached $132.5 billion, a year-on-year increase of 138%, up from $104 billion at the end of Q2. The company has also raised its revenue guidance for FY2026 to $13 billion to $13.3 billion and expects an annualized revenue run rate of $20 billion to $21 billion by the end of the year.

After the report was released, CoreWeave's stock price rose about 5% in after-hours trading. Over the previous month, the company’s stock price had fallen more than 40%, mainly due to concerns about high interest rates, massive debt, and the payback period for capital expenditures in AI data centers. This report temporarily alleviated concerns about insufficient demand, but has not completely resolved issues related to financing costs and free cash flow.

The core contradiction faced by CoreWeave is now very clear: there is no lack of customer demand and orders, the real test is whether the company can convert these long-term contracts into deployed capacity, revenue, and sustainable cash flow at reasonable financing costs.

Data in a Minute

• Q3 FY2026 revenue of $3.661 billion, year-on-year increase of 168%, above market expectations of about $3.55 billion;

• Revenue increased by about 42% from Q2's $2.575 billion;

• GAAP operating profit of $207 million, compared to $52 million in the same period last year;

• GAAP operating margin is 6%, up from 4% in the same period last year;

• Adjusted operating profit of $379 million, with an adjusted operating margin of 10%;

• Adjusted EBITDA of $2.256 billion, year-on-year increase of 169%;

• Adjusted EBITDA margin of 62%, the highest level in the past five quarters;

• GAAP net loss of $709 million, compared to a net loss of $110 million in the same period last year;

• GAAP loss per share of $1.27, compared to a loss per share of $0.22 in the same period last year;

• Adjusted net loss of $529 million, compared to $567 million in the previous quarter;

• Net interest expense for the third quarter of $846 million, compared to $310 million in the same period last year;

• Revenue Backlog reached $132.5 billion, year-on-year increase of 138%, compared to $104 billion at the end of Q2;

• About 26% of the Revenue Backlog is expected to be recognized in the next 24 months, about 36% is expected to be recognized after 48 months;

• Capital expenditures in the third quarter reached $14.511 billion, compared to about $9.4 billion in the second quarter;

• Active power capacity exceeded 1.7GW, with over 200MW added during the quarter, nearly doubling since the beginning of the year;

• Contracted power capacity exceeded 4.6GW, with over 900MW added during the quarter;

• Contracted power capacity in the international market exceeded 1.3GW;

• The company expects Q4 interest expense to reach $1.05 billion to $1.15 billion;

• Total debt as of the end of September was approximately $46.9 billion;

• The company expects to receive about $9 billion in customer prepayments and deposits over the next three months;

• The company expects to achieve adjusted profitability in the first half of 2028;

• After the earnings report was released, the stock price briefly rose about 5% in after-hours trading.

MSX View

Currently, AI computing power demand remains strong. CoreWeave's Revenue Backlog grew from $104 billion at the end of Q2 to $132.5 billion, an increase of about $28.5 billion in a single quarter. The customer base has expanded from AI laboratories to large cloud service providers, enterprises, and the public sector. The company indicated that current demand is about ten times the deliverable capacity, with most of the capacity already sold out for the next year. This indicates that the most significant issue in the AI infrastructure industry is still whether power can be secured, data center construction can be completed, and GPUs can be installed and operated on time.

Active power capacity increased by over 200MW to more than 1.7GW in Q3, directly driving revenue growth of over $1 billion quarter-on-quarter. The company expects active capacity to exceed 1.85GW by the end of the year, indicating that new computing resources will still begin generating revenue in Q4.

However, a backlog of orders does not equate to revenue that can be recognized immediately. The $132.5 billion Revenue Backlog disclosed by CoreWeave includes not only the remaining performance obligations in accounting terms but also other revenue expected to be recognized from signed contracts, with actual recognition still depending on service delivery and capacity availability.

In terms of the maturity structure, only about 26% of the order backlog is expected to be recognized in the next 24 months, while about 36% is expected to be recognized after 48 months. This provides the company with a longer revenue visibility while also bringing customer credit. CoreWeave needs to first build data centers, purchase GPUs, and secure power before gradually recognizing contract revenue. The longer the customer contract periods, the higher the revenue visibility, but the longer the initial investments and asset recovery periods that the company bears.

This quarter's capital expenditures reached $14.5 billion, nearly four times the quarterly revenue. The full-year capital expenditure guidance has further increased to $37 billion to $39 billion, approximately 2.9 times the median of the full-year revenue guidance. This indicates that CoreWeave is still in the phase of exchanging large capital investments for future revenue. The adjusted EBITDA of $2.256 billion appears to be very strong, but this metric excludes items such as depreciation, amortization, interest, and equity incentives. For a company that needs to continuously procure GPUs and build data centers, depreciation and interest are not costs that can be ignored in the long term.

In Q3, CoreWeave achieved a GAAP operating profit of $207 million, but net interest expense reached $846 million, resulting in a net loss of $709 million. The company expects interest expenses in Q4 to rise to $1.05 billion to $1.15 billion. Therefore, CoreWeave has now demonstrated that data centers can generate high operational profits, but has not yet proven that these profits are sufficient to cover financing costs and capital required for ongoing expansion.

Management is narrowing the funding gap in three ways. First, by project financing based on customer contracts. The company emphasizes that about 75% of the committed capital expenditures correspond to investment-grade customers, and financial institutions can provide financing based on long-term contracts and customer credit.

Second, by increasing customer prepayments. CoreWeave expects to receive about $9 billion in customer prepayments and deposits over the next three months, sharing some of the data center construction funding burden with customers, thus minimizing the pressure on the company to completely rely on the debt market for expansion.

Third, by expanding financing channels. The company completed about $4.2 billion in convertible bond financing in Q3, established an ATM stock issuance plan for up to 35 million shares, and obtained $2.6 billion in new loan facilities. This has increased the availability of funds but also brings higher interest expenses and potential equity dilution.

The company stated that while executing existing orders, it expects the additional capital required at the parent company level to be less than $5 billion by the end of 2027 and anticipates achieving adjusted profitability in the first half of 2028. If this target can be achieved, it means that customer prepayments, project financing, and operating cash flow can cover a substantial portion of the expansion funds.

CoreWeave's advantages include large-scale orders, advanced GPU clusters, and rapid delivery capabilities. In Q3, the company started deploying NVIDIA Vera Rubin NVL72 and stated that the token throughput for production workloads reached 4.8 times that of GB200 NVL72. Higher computational efficiency helps increase revenue generated per unit of power and rack. Risks include the speed of GPU iteration, customer concentration, power access, data center construction delays, and long-term interest rates. As long as the new generation of GPUs rapidly reduces the economic value of the previous generation's devices, or if financing costs continue to exceed expectations, the return cycle on existing assets may be extended.

Therefore, the most positive signal from this earnings report is that CoreWeave is accelerating the transformation of power and GPUs into revenue, and the order backlog continues to grow; the biggest constraint remains that capital expenditures and interest costs are still far higher than current operating profits.

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