(Reuters) -CoreWeave's shares plunged nearly 9% in premarket trading on Tuesday after it scaled back its annual revenue forecast due to data center hiccups despite strong demand for its artificial intelligence services.
The Nvidia-backed company's margins are pressured by soaring infrastructure expenses, rising AI chip prices and intensifying competition for computing power, weighing on profitability.
CoreWeave said it faced delays with a key data center partner, but that the impacted customer had
agreed to extend the contract, keeping the deal's total value intact. It did not name the client.
"The quarter revealed something that investors have feared for a while - operational risk," analysts at Barclays said."This is the first time for the young AI infrastructure industry that this has come up and will likely remind investors that these large scale AI data centers are not easy engineering projects."
Once a major Ethereum miner, CoreWeave has pivoted to capitalize on the AI boom by leasing Nvidia GPUs and securing deals with tech majors such as Meta and ChatGPT-maker OpenAI.
The stock, which has climbed about 164% since its March IPO, reported third-quarter revenue of $1.36 billion, topping analysts' average estimate of $1.29 billion, according to data compiled by LSEG.
The company's adjusted operating income margin slipped to 16% in the third quarter from 21% a year earlier."This seems like an incrementally worse setup for the day in the future when demand isn't off the charts," analysts at MoffettNathanson said.
(Reporting by Joel Jose in Bengaluru; Editing by Pooja Desai)
