Feb 27 (Reuters) - Shares of CoreWeave slumped around 12% before the bell on Friday, after the company's plans to double capital expenditure this year fueled investor concerns about margin pressure and effective returns from its artificial intelligence push.
The cloud infrastructure company has committed significant capital toward the construction of large data centers filled with top-of-the line Nvidia chips to capitalize on the booming demand for AI services.
CoreWeave has budgeted $30 billion to
$35 billion in capital expenditure this year, more than double the $14.9 billion it spent in 2025. The increased spending will put some "short-term pressure on the margins," the company said.
The company's ballooning spending mirrors that of hyperscale cloud providers such as Alphabet's Google and Amazon , which have collectively committed more than $600 billion this year for AI infrastructure buildouts.
Unlike Big Tech companies that are cushioned by massive cash reserves, neoclouds like CoreWeave and peer Nebius are more exposed to significant market downturns due to their business models.
CoreWeave had $3.13 billion in cash and its equivalents, compared with Microsoft's $24.3 billion and Amazon's $86.8 billion, according to their most recent earnings reports.
Amsterdam-based Nebius earlier this month reported a sharp rise in capital spending to $2.1 billion in the December quarter from just $416 million in the prior year period.
Neoclouds offer hardware and cloud capacity as services to other tech firms, usually by providing access to high-quality processors and cloud infrastructure.
Moreover, a rush to build out data centers could put pressure on chip availability. Any disruption to the supply could hamper CoreWeave's infrastructure plans and leave it with a revenue backlog it cannot fulfill.
(Reporting by Zaheer Kachwala in Bengaluru; Editing by Leroy Leo)
