CoreWeave: AI Chip Stock Surges 251% After IPO

Published Date : 11/06/2025 

Since its IPO in March, CoreWeave's stock has surged by 251%, but is it still a worthwhile investment? Explore the company’s unique business model and valuation to decide. 

Shares of CoreWeave have skyrocketed by 251% since its IPO in March, and the stock continues to attract attention. But is it still a good time to invest, or is the company becoming the next meme stock?

When it comes to artificial intelligence (AI) chip stocks, names like Nvidia, Broadcom, Advanced Micro Devices (AMD), and Taiwan Semiconductor Manufacturing (TSMC) dominate the conversation. These companies are at the forefront of designing and manufacturing advanced chipsets, known as graphics processing units (GPUs). While investing in semiconductor stocks has generally been profitable over the past two years, these leading stocks have taken a breather in 2025 due to uncertainties around tariff negotiations and exposure to China.

One opportunity that has emerged as a new favorite among chip stocks is CoreWeave (CRWV), which went public in March. Since the initial public offering, shares of CoreWeave have surged by 251% as of the closing bell on June 6. The question now is whether it's the right time to invest in CoreWeave or if the stock is becoming overhyped.

CoreWeave plays a crucial role in the AI landscape, offering an infrastructure services business where customers can access clusters of Nvidia GPUs and other architectures via the cloud. This model allows generative AI developers to efficiently access the best hardware without the need to directly order, wait for manufacturing, and work with integrated systems designers to build custom training and inferencing clusters.

The global management consulting firm McKinsey & Company recently reported that nearly $7 trillion could be allocated toward AI infrastructure spend over the next five years. A significant portion of this investment will go toward hardware for AI data centers. Initiatives like Project Stargate in the U.S. and similar buildouts in the Middle East and other regions are driving these secular tailwinds.

At the end of the first quarter (March 31), CoreWeave reported $14.7 billion in remaining performance obligations and another $11.2 billion in committed contracts from a strategic deal with OpenAI. With a total backlog of $25.9 billion, the company is poised for significant growth. Analysts predict that CoreWeave will triple its revenue over the next two years and transition to a profitable business. However, the company’s valuation suggests that much of this good news is already priced into the stock.

CoreWeave's price-to-sales ratio is significantly higher than more mature and diversified data center infrastructure businesses like Oracle and Vertiv. The company’s multiple continues to expand, which is a cause for concern. Investing in a stock at record levels requires a high conviction that the price will continue to rise. While CoreWeave could be a winner in the long run, investing at its current price is not prudent. Momentum stocks can be risky, and it wouldn't be surprising to see CoreWeave's price normalize sooner rather than later.

If CoreWeave shares begin to show some weakness, that could be an opportunity for smart investors to buy the dip. For now, CoreWeave exhibits some characteristics of a meme stock, and shares are best left avoided. While I believe CoreWeave has a bright future, there may be more reasonable opportunities to buy the stock in the future.

In summary, CoreWeave's unique business model and significant backlog make it an interesting player in the AI chip market. However, the current valuation and potential for normalization suggest that investors should wait for a more favorable entry point. 

Frequently Asked Questions (FAQS): 

Q: What is CoreWeave's unique business model?

A: CoreWeave offers an infrastructure services business where customers can access clusters of Nvidia GPUs and other architectures via the cloud. This allows generative AI developers to efficiently access the best hardware without the need to directly order, wait for manufacturing, and work with integrated systems designers to build custom training and inferencing clusters.

Q: How much has CoreWeave's stock increased since its IPO?

A: Since its IPO in March, CoreWeave's stock has increased by 251% as of the closing bell on June 6.

Q: What are the main competitors in the AI chip market?

A: The main competitors in the AI chip market include Nvidia, Broadcom, Advanced Micro Devices (AMD), and Taiwan Semiconductor Manufacturing (TSMC).

Q: What is the projected AI infrastructure spend over the next five years?

A: According to McKinsey & Company, nearly $7 trillion could be allocated toward AI infrastructure spend over the next five years, with a significant portion going toward hardware for AI data centers.

Q: Is CoreWeave currently overvalued?

A: CoreWeave's price-to-sales ratio is significantly higher than more mature and diversified data center infrastructure businesses like Oracle and Vertiv, suggesting that the stock may be overvalued. The company’s multiple continues to expand, which is a cause for concern. 

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