CoreWeave stock price forecast ahead of earnings: will it pop or drop?

CoreWeave stock price has pulled back in the past few weeks, moving to the lowest level since September 9, as concerns about the AI bubble remains. It also retreated as competition in the industry rose, and as investors waited for the upcoming earnings, which would provide more color on its business. 

It was trading at $105, down by 32% from its highest level this month ahead of its quarterly financial results.

CoreWeave earnings ahead 

The main catalyst for the CRWV stock price this week will be the upcoming financial results, which will provide more information about its growth, spending, and color on the end of the Core Scientific buyout process.

Analysts believe that CoreWeave will publish strong numbers as demand for AI solutions is still soaring. A good example of this is the recently signed deals, including the $14.2 billion infrastructure partnership with Meta Platforms and the multi-billion-dollar one with OpenAI. 

Its OpenAI deal started at $11.9 billion, and was then expanded by $4 billion. The company has also reached deals with companies like Cohere, Mistral, Novel, and Woven, a Toyota company. 

The most recent results showed that CoreWeave’s revenue jumped by 207% from the same period last year. Its revenue backlog jumped by 86% to $30.1 billion, while its adjusted EBITDA jumped to $753 million, representing a 62% margin.

The main challenge for CoreWeave is that its capital expenditures remain at an elevated level, with the company spending $2.9 billion in the second quarter. Its guidance was that it would spend over $26 billion building its data centers this year.

Data compiled by Yahoo Finance shows that the company's third quarter revenue will be $1.26 billion, a big increase from its guidance last year. Analysts also expects its revenue guidance for the current quarter to be $1.79 billion, and the annual figure to be $5.26 billion.

CoreWeave’s earnings per share (EPS) is expected to come in at a 51-cent loss, which will be worse than the recent $0.42. Its EPS figure has missed analysts' estimates in the past few quarters. 

Potential risks remain

CoreWeave has several potential risks in the coming months. The first major one is that competition in the AI data center industry has jumped in the past few months, with companies like IREN, Terawulf, Bitfarm, and Nebius coming to the industry. 

Nebius recently won a $17.4 billion AI infrastructure deal with Microsoft, while IREN reached a $9.7 deal with Microsoft. TeraWulf reached a large deal with Fluidstack, a company backed by Google.

As such, the company may struggle to find other large-scale customers in the future. 

The other risk is that there is a lingering fear that the AI bubble may burst soon. Such a move may lead to lower spending by large companies in the US and other countries. 

Additionally, the company faces the risk of fundraising and pressure from short sellers. Its short interest stands at 29.4 million shares, giving it a short interest of about 10.40%.

CoreWeave stock price analysis

The 12-hour chart shows that the CoreWeave share price has pulled back in the past few days, moving from a high of $152 in October to the current $104. It has moved below the 50% Fibonacci Retracement level and the 50-period Exponential Moving Average (EMA).

Therefore, the stock will likely have a bearish breakout in the coming days. If this happens, the next key level to watch will be at $84.70, its lowest level in August this year. A move above the 50-period moving average at $124 will invalidate the bearish outlook.