Cathie Wood, the CEO of Ark Invest, bucked the overall rising market last Friday to buy three stocks that each fell more than 10% in a single day. CoreWeave (CRWV) faces the issue of revenue guidance falling short of expectations, yet boasts a staggering $100 billion in backlog orders; Cloudflare (NET) surpassed earnings expectations but was sold off due to a lack of significant upward revision in its full-year outlook, while simultaneously announcing large-scale layoffs; Toast (TOST) delivered strong results but was dragged down by industry concerns. Wood’s purchases reflect her typical style as a growth investor: buying against the grain when companies face short-term setbacks but their long-term growth logic remains intact.
CoreWeave’s stock fell 11% last Friday after the company reported mixed financial results and concerning revenue guidance. This hyperscale cloud computing provider is experiencing explosive growth, benefiting from the immense demand driven by the AI revolution for high-performance, low-latency GPU computing infrastructure solutions — an area where CoreWeave excels.
In the first three months of the year, the company’s revenue grew 112% to $2.078 billion. Analysts had expected growth of 101%, so the actual results significantly exceeded expectations. However, the situation on the other side of the income statement was different. The company posted a loss of $1.40 per share in the first quarter, far exceeding the $1.20 per share loss anticipated by Wall Street professionals.
CoreWeave has missed earnings expectations in three of the past four quarters, but that shouldn’t be a problem. This is not a story centered on profitability. CoreWeave is investing in growth, spending heavily to ensure it meets explosive AI demand. No one expects it to be profitable for the next two years.
Despite substantial long-term debt on its balance sheet, orders continue to pile up. CoreWeave secured another $40 billion in order commitments this quarter, bringing its backlog to an astonishing $100 billion as of the end of March.
Cloudflare’s stock briefly approached an all-time high during trading last Thursday. As Cloudflare positions itself as an AI agent, edge computing specialist, and critical infrastructure for the enterprise security market, initial market skepticism about cybersecurity stocks in the AI era is fading. But the bullish momentum vanished after Cloudflare released its latest financial update.
The data was quite solid. Revenue grew 34% to $640 million. Adjusted earnings per share were $0.25. Cloudflare beat expectations on both fronts. Its revenue guidance for the current quarter was slightly soft, but it did raise its full-year 2026 revenue and adjusted profit outlook. Unfortunately, the full-year revenue raise was $18 million to $20 million, essentially matching the $20 million beat on its initial first-quarter expectations. In short, despite a flood of new orders, the outlook for the final nine months of the year remains largely unchanged.
Cloudflare also announced it would lay off 1,100 employees in the coming months. This is the next step in its drive to transform the company into an agentic AI-first operating model. While this move will lower costs in the long run, is reducing overhead the wisest decision at a time when it cannot fulfill its backlog fast enough?
Toast fell 15% last Friday. Its cloud platform for restaurant operators continues to gain market acceptance. Toast added a net 7,000 new locations in the first three months of the year. The total number of locations using Toast reached 171,000, up 22% year-over-year.
That matched a 22% increase in its first-quarter total payment volume of $51.3 billion. Both net income and operating profit more than doubled. The market remained unimpressed. Short-term concerns about the restaurant industry and profit pressures led to a sell-off in the stock, despite the otherwise stellar earnings report. Once again, Wood chose to increase her stake.
