Is CoreWeave Stock a Buy Right Now?
Key Points
Revenue continues to grow at triple-digit percentages, and its valuation is low.
The company's debt burden appears increasingly risky in an environment of rising interest rates.
CoreWeave (NASDAQ: CRWV) is a stock that many investors struggle with. It is a leader among neocloud companies, and Nvidia's stake in and partnership with CoreWeave gives it a competitive advantage.
Unfortunately, as an emerging company, CoreWeave has had to rely heavily on debt to meet its growing backlog, making its prospects uncertain should the artificial intelligence (AI) boom slow down. Consequently, the question for investors is whether the cloud stock is a buy despite that risk.
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The state of CoreWeave
Admittedly, CoreWeave is likely on track for massive gains if it can survive its challenges. Its backlog grew to more than $104 billion as of the end of the second quarter of 2026. Also, since it signed an additional $25 billion deal in early Q3, that figure will almost certainly increase after the Q3 release.
Moreover, it appears to have some pricing power, as Q2 revenue of nearly $2.6 billion increased by 112% from year-ago levels. Amid that growth, it lost $626 million as its interest expense hit $640 million.
Furthermore, its price-to-sales (P/S) ratio of 6 might imply the stock is a screaming buy. Still, from another perspective, it suggests the stock is cheap for a reason.
That metric inspired my purchase and later exit from the stock as I became concerned about one growing problem: the massive debt load. CoreWeave reported over $14 billion in capital expenditures (capex) in the first half of 2026 after spending $10 billion in 2025. To fund that spending, it has accumulated over $35 billion in total debt, a tremendous burden for a company with $5 billion in book value.
Indeed, the debt may not be a problem if revenue continues to grow rapidly. Still, rising interest rates will probably make this financing more expensive.
Additionally, higher interest rates could put the brakes on a rapidly growing industry, potentially leading to an AI bust. If that were to occur, CoreWeave's ability to service its debt could become uncertain.
Hence, while investors can buy this up-and-coming AI stock cheaply, they also take on tremendous risks by buying now.
Is CoreWeave stock a buy?
Given the level of risk, CoreWeave stock is probably not a buy unless it proves it can survive a pullback in the AI industry.
Indeed, the stock is cheap, and if it can stay afloat amid its debt burden, it could make investors wealthy. For now, it looks like it is doing just that.
However, that could change if rising interest rates or another headwind cause an industry slowdown. It was that issue that persuaded me to sell my shares, at least for now.
Despite that concern, I do not think AI is going away, and I believe the world will need neoclouds regardless of industry cycles. If CoreWeave shows it can survive such an event, I will likely reestablish my position in this stock.
Nonetheless, a rising-rate environment is not one in which I want to own a heavily indebted company, and that risk could outweigh the potential rewards of holding shares right now. Thus, unless one has a high risk tolerance, I do not think investors should own CoreWeave at this time.
Will Healy has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nvidia. The Motley Fool has a disclosure policy.