Shares of CoreWeave (NASDAQ: CRWV) have been soaring higher after the company released its latest quarterly numbers. Yesterday, the tech company posted its second-quarter results, which showed tremendous year-over-year growth, as it continues to benefit from the insatiable demand for compute as companies invest heavily in artificial intelligence (AI). While the growth is certainly encouraging, there's still a massive problem investors can't afford to ignore: a lack of profitability.
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Continue » For the second quarter, which ended June 30, CoreWeave's revenue totaled $2.6 billion, which was more than double the $1.2 billion it recorded in the prior-year period. That's incredible for the business, signifying that demand remains robust and spending on AI doesn't appear to be slowing. The problem, however, is that even with CoreWeave's business seemingly doing so well, it still can't consistently stay out of the red.
A year ago, it reported an operating profit of $19 million. It was modest, but positive nonetheless. This past quarter, the tech company fell back into the red, with CoreWeave incurring an operating loss of $49 million.
The big reason: its technology and infrastructure costs also rose significantly, from $670 million a year ago to $1.5 billion this past quarter. Operating income reflects how profitable the company is after its operating expenses, so this doesn't yet include interest costs of $640 million, which further weighed on its bottom line. Overall, CoreWeave's net loss was $626 million -- up from $290 million a year ago.
If CoreWeave isn't generating an operating profit and isn't showing significant progress, it's hard to make the case that the business has a path to overall profitability. CoreWeave experienced strong growth last quarter, but that alone doesn't make the business investable. It still hasn't shown that the business model works and can be reliably profitable.
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