One of the more notable drivers of tech stocks in the last few years has been prowess in artificial intelligence (AI). Nvidia's AI chip has transformed that stock and the industry it serves, while the AI-driven capabilities of Palantir have taken that stock into the stratosphere as its clients benefited from massive productivity gains.
Looking forward, investors are on the lookout for the next high-performing AI stock. Such predictions are difficult to make before they occur. However, CoreWeave (CRWV 7.12%) has the potential to become the same type of growth stock, and its attributes explain why.
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Why CoreWeave?
On the surface, CoreWeave may look like just another cloud stock. Companies like Amazon and Microsoft claim the majority of the cloud business, and as a newly launched stock with a $45 billion market cap, CoreWeave may not appear particularly compelling.
Still, CoreWeave has developed a critical competitive advantage as it is the most prominent cloud company offering a cloud environment focused exclusively on AI. Thus, when its data centers work with Nvidia GPUs, CoreWeave holds an edge in AI training hardware.
Moreover, most companies do not want to pay the high cost of building their own data centers. Such AI-driven tasks also require more computing power than companies have available in-house. This plays into the hands of companies like CoreWeave, which can drive considerable revenues by offering such a service.
Thanks to its success in this business, the company's revenue growth is impressive by just about any measure. It generated nearly $1.4 billion in revenue in the third quarter of 2025, a 134% increase from year-ago levels.
NASDAQ: CRWV
Key Data Points
CoreWeave's challenges
Unfortunately, keeping up with that rising demand has come at a cost. Over the same period, the cost of revenue surged 158% over the same timeframe.
Consequently, such costs have weighed on CoreWeave's financials. It earned $52 million in operating income, down from $117 million in the same quarter last year. Additionally, it had to borrow money to keep up with demand, causing interest expenses to surge to almost $311 million versus $104 million in the year-ago quarter.
A $127 million income tax benefit helped it stem losses. With that, CoreWeave lost $110 million in Q3, a significant improvement from the $389 million loss in the third quarter of 2024.
However, its $14 billion in debt is a concern, and that was highlighted again when CoreWeave issued $2 billion in convertible notes this month, later upsized to $2.25 billion.
While such added debt may seem unsettling, investors should know that these notes have a 1.75% interest rate and the option to convert to shares at specific prices through 2031. That may be a more appealing alternative to its existing debt, almost all of which is at interest rates ranging from 9% to 15%.
Admittedly, that debt could devastate CoreWeave stock if its cloud product fails to live up to expectations. Still, analysts forecast a 135% revenue increase in 2026, indicating its rapid growth is going to continue into the foreseeable future. Assuming it continues to make improvements, it can likely refinance that debt at lower rates and possibly start retiring debt once CoreWeave turns profitable or experiences a considerable bump in its stock price.
CoreWeave as the next great AI stock
Ultimately, CoreWeave's AI-specific cloud could take its stock considerably higher in the next tech rally.
CoreWeave is not the only cloud company, and the ongoing losses and rising debt levels make this a higher-risk stock. But investors should keep the massive AI demand and the company's triple-digit revenue increases in mind. While that growth creates the need for massive investments and added borrowing, it could fuel growth in the stock price and eventual profitability.
Over time, such conditions can help the company refinance and retire debt as it solidifies its place in the market. That can not only make CoreWeave the next great AI company, but it could also fuel an outsized rally in CoreWeave stock.
