AI darling CoreWeave drops 10% after data-center delay leads to weak full-year guidance

• CoreWeave stock dropped 10% on Tuesday.

• The AI company reported Q3 earnings, beating estimates but lowering full-year guidance.

• The company, which rents data center compute, has seen its shares surge 170% year-to-date.

The move: CoreWeave stock dropped 10% on Tuesday. The data center stock has struggled over the past month but is still up more than 170% year-to-date through Monday’s close.

The why: The AI infrastructure darling reported third-quarter earnings. Revenue came in at $1.36 billion, beating the $1.29 billion anticipated by Wall Street analysts.

However, the company, which rents GPUs and data center compute to AI companies, also scaled back its annual revenue forecast and revealed temporary delays involving a third-party data center developer. The company’s sales range for the year is now $5.05 billion to $5.15 billion after previously being set at $5.35 billion.

What it means: While CoreWeave’s lowered guidance might be spooking some investors, analysts note that it is likely a temporary issue that will result in revenue for the current quarter being pulled forward into the first quarter of next year. The company’s third-quarter revenue beat indicates that demand for its services is still strong.

“CoreWeave’s position as the essential cloud for AI has never been stronger as we drive growth through focus and innovation to power the next generation of AI,” CEO Michael Intrator said.

However, Tuesday’s tumble after otherwise solid quarterly results could also reflect the growing sentiment on Wall Street that tech stocks are simply too expensive. Bloated stock valuations were the culprit behind last week’s sharp drop in Palantir stock, as well as the broader swoon in the Nasdaq 100, which had its worst week since April.

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