Shares of the high-flying AI cloud provider tumbled after it issued a revenue forecast that fell short of sky-high expectations, while a warning from prominent investor Michael Burry cast a shadow over its accounting practices.
CoreWeave Holdings Inc. (NASDAQ: CRWV), a leading provider of AI cloud computing infrastructure, saw its shares nosedive on Tuesday, closing down 14.4%. The sell-off was triggered by the company’s third-quarter earnings report, which, despite showcasing blistering revenue growth, contained a 2025 revenue guidance that disappointed investors.
The decline starkly contrasted with the broader market, where the S&P 500 edged up 0.2%.
On the surface, CoreWeave’s Q3 results were impressive. The company reported revenue of $1.36 billion, a 134% surge year-over-year that handily beat Wall Street’s target of $1.29 billion. Its net loss also significantly improved, shrinking to $110.1 million from $359.8 million a year earlier.
However, digging deeper revealed concerning figures. The company’s gross margins contracted to their lowest level since Q1 2024, while operating margins plummeted to 3.8% from 20.1% in the same quarter last year, indicating rising costs and potential pricing pressures.
The primary catalyst for the stock plunge was the company’s revised full-year revenue guidance. CoreWeave now expects revenue between $5.05 billion and $5.15 billion, well below the analyst consensus estimate of $5.29 billion.
CEO Mike Intrator sought to reassure investors, attributing the shortfall to a delay tied to a single third-party developer and emphasizing that underlying demand remains robust. “This does not reflect a slowdown in demand,” Intrator stated. Yet, the market’s violent reaction highlights the extreme volatility of the stock and how shares are priced for perfection, leaving little room for any missteps.
Beyond the guidance, a broader warning from famed investor Michael Burry of “The Big Short” fame has put CoreWeave’s accounting practices under the microscope. Burry recently accused major AI tech companies of artificially inflating earnings by understating depreciation expenses. He alleges that by extending the useful life of Nvidia GPUs, the five largest AI “hyperscalers” could collectively understate depreciation by a cumulative $176 billion between 2026 and 2028.
CoreWeave finds itself in the center of this debate. Just before going public in 2023, the company extended the useful life of its technology equipment—which includes the GPUs that power its AI data centers—from five years to six years. With over $13 billion in such assets as of June, this change reduces its annual depreciation expense by hundreds of millions of dollars, thereby making its reported losses appear smaller.
The critical question is whether a six-year lifespan is realistic. Industry reports, including one from Tom’s Hardware, suggest that data center GPUs running intense AI workloads at high utilization may have practical useful lives of only one to three years—similar to those used in cryptocurrency mining. If this proves accurate, CoreWeave’s depreciation schedule is overly optimistic, and its current losses are significantly understated. A future correction to a shorter lifespan would materially worsen its bottom line.
It is important to note that Michael Burry has disclosed short positions in various AI stocks, meaning he profits from their decline. His accusations remain unproven. CoreWeave’s six-year depreciation is also in line with many of its industry peers.
Nevertheless, for investors, the combination of a disappointing outlook and questions over the sustainability of its accounting presents a dual challenge. While CoreWeave’s growth story remains compelling, the aftermath of its earnings report suggests the market is waking up to the risks baked into its high-flying stock.
