CoreWeave to Set up New Data Center: Overcapacity or Future-Proofing?
This new facility adds to CoreWeave's growing network of data centers. It has a network of 33 purpose-built AI-data centers across the United States and Europe, supported by 420MW of active power. The Lancaster facility will be adding to the company's 1.6 gigawatt (GW) of contracted power, offering a multiyear runway in power capacity.
This infrastructure buildout is underpinned by surging demand for high-performance AI compute. For a hypergrowth company, data-center expansion to support accelerating demand amid intense competition is more of strategic future-proofing than anything else. Hyperscalers like Amazon Web Services, Google Cloud and Microsoft Corporation MSFT operate hundreds of facilities globally.
On the last earnings call, CRWV management highlighted that AI is forecasted to have a global economic impact of $20 trillion by 2030, while the total addressable market is anticipated to increase to $400 billion by 2028. CRWV's strong backlog of $25.9 billion at the end of the last reported quarter underscores its growing market share. CRWV inked a strategic partnership with OpenAI for about $11.9 billion, while adding several new enterprise customers and a hyperscaler client. It has signed expansion agreements with many customers, including a $4 billion (to be included in backlog from second quarter) expansion with a big AI enterprise.
Of course, this aggressive expansion comes with risks. Higher capex, subsequent rising interest costs and macro uncertainty could test execution. CRWV expects capex to be between $20 billion and $23 billion for 2025. Nonetheless, CoreWeave's self-amortizing debt structure and strong revenue visibility offer meaningful downside protection.
Data Center Footprint for Competitors
Microsoft has a vast network of data centers for its Azure platform. It has more than 400 data centers across 70-plus Azure regions. Earlier in January 2025, MSFT announced a $80 billion investment toward the development of AI-enabled data centers globally for fiscal 2025, with more than half of the investment earmarked for the United States.
In the third quarter of fiscal 2025, the company spent $21.4 billion on capex and $16.7 billion on cash for PP&E. MSFT highlighted that nearly half of the cloud and AI-related spend was on long-lived assets that will support monetization over the next 15 years and more. The remainder focused on servers, both CPUs and GPUs, to fulfill rising AI demand, including a $315 billion customer backlog. Looking ahead to fiscal 2026, capex will grow at a slower rate than fiscal 2025, with a higher share of short-lived assets.
Nebius Group N.V. NBIS is focusing on building a global footprint, with capacity in the United States, Europe and the Middle East amid accelerating demand for its AI-infrastructure services. In the last reported quarter, Nebius added three new regions, including a strategic data center in Israel. Infrastructure enhancement helps reduce latency, diversify risk and extend support for global customer requirements, which is crucial for enterprise AI workloads.
In June 2025, Nebius announced private placement of $1 billion in convertible notes to capitalize on the AI-infrastructure boom and drive-up revenue opportunities in 2026. It has an ambitious $2 billion capital expenditure plan for 2025. NBIS plans to build a data-center infrastructure pipeline that can offer scalability to more than 1GW of power. With this, NBIS expects significantly higher revenue potential beyond its current guidance.
CRWV Price Performance and Estimates
Shares of CoreWeave have lost 21.9% over the past month against the Internet Software industry's growth of 1.8%. CoreWeave's share price took a hit after it announced the acquisition of Core Scientific on July 7. There is intense investor scrutiny regarding the deal. By taking ownership of Core Scientific's 1.3GW power infrastructure footprint, with an additional 1GW expansion potential, CoreWeave gains ample room to grow its AI infrastructure. With demand for AI compute soaring, this extra capacity provides a strong long-term advantage.
The Zacks Consensus Estimate for CRWV's earnings for 2025 has been unchanged over the past 30 days.
CRWV currently carries a Zacks Rank #4 (Sell).
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