Shares of CoreWeave (NASDAQ:CRWV) slid more than 6% on Thursday following the company’s first earnings report since its March IPO, as investors reacted to a projected surge in capital expenditures that far outpaces expected revenue for 2025.

The Nvidia-backed AI cloud provider revealed plans to invest heavily in infrastructure, estimating annual capital spending at nearly four times its anticipated revenue next year. The bold forecast highlights the ongoing arms race in artificial intelligence computing, even as market skepticism grows in light of emerging, cost-efficient AI platforms like those from DeepSeek.

In a statement, CoreWeave noted that it has added another major hyperscaler to its customer roster and expanded several existing agreements, including a $4 billion contract with a leading AI firm.

However, some analysts were unsettled by the financial implications of the company’s aggressive spending strategy.

“Investors were alarmed by the level of capital intensity for CoreWeave,” said Gil Luria, an analyst at D.A. Davidson & Co. He added that while signing hyperscalers might appear positive on the surface, it could be misleading. “These are CoreWeave’s direct competitors, relying on CoreWeave only temporarily until their own infrastructure is fully built out.”

Despite those concerns, the company reported impressive top-line growth. Revenue for the first quarter of 2025 jumped to $981.6 million, more than five times higher than the same period last year. Management remained confident about future demand, citing strong interest in its high-performance computing offerings.

Still, analysts such as those at MoffettNathanson noted that the high costs associated with preparing for future demand could give investors pause – especially given the already lofty valuation of the stock.

CoreWeave isn’t alone in its heavy investment push. In recent months, major tech firms including Meta (NASDAQ:META), Alphabet (NASDAQ:GOOGL), and Microsoft (NASDAQ:MSFT) have all signaled increased capital commitments to support AI development and infrastructure.

Since its IPO in March, CoreWeave’s stock has surged 69% above its initial offering price. At least seven brokerages have raised their price targets for the company, now ranging between $50 and $80 – despite the looming questions around its long-term profitability.

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