CoreWeave CEO defends spending plans, tries to combat debt narrative as stock plummets nearly 20%

In a recent interview on CNBC's "Squawk on the Street," CoreWeave CEO Mike Intrator staunchly defended the company's ambitious spending plans as shares experienced a near 20% drop following concerns about profitability. Intrator emphasized that CoreWeave is strategically investing in infrastructure, accepting a temporary decline in margins to seize what he describes as a "once in a generation moment" in capacity demand. Addressing shareholder apprehensions, Intrator stated, "I understand the concerns that people have as they see us allocating a massive scale of money to this market, but the truth of the matter is, our backlog is enormous." CoreWeave's stock fell significantly due to disappointing revenue guidance, as the New Jersey-based firm revealed plans to spend between $30 billion and $35 billion by 2026, exceeding FactSet's estimate of $26.9 billion, which only heightened worries regarding profitability. Growing concerns surround the sustainability of CoreWeave's debt and its business model, which heavily relies on debt financing to acquire advanced AI Nvidia chips for rental purposes. A substantial portion of its revenue is dependent on a small number of hyperscalers and AI firms, including industry giants like Microsoft and OpenAI. When questioned about potential challenges in the credit market that could inflate capital costs, Intrator expressed optimism, stating he expects costs to continue decreasing. He argued, "That narrative is out there, but the data does not support it in any way, shape, or form." He highlighted a reduction in the company's cost of capital by 300 basis points over the past year, translating to approximately $700 million in savings when calculated against the company’s debt load, and noted a significant 600 basis point drop over the last two years.