AI cloud computing business CoreWeave (NASDAQ:CRWV) has been through a remarkably volatile year. Though the stock has roughly doubled since going public early in 2025, its current price of $78.87 is far below the 52-week high of $187.00 it reached in June. Why is CoreWeave stock down so much since the middle of the year, and could now be the time to buy CRWV while its prices are lower?
Why Did CoreWeave Fall Off Its Highs?
CoreWeave’s selloff is the result of several different factors exerting downward pressure on the stock. One of the most obvious of these has been a steady pace of share dilution that has proven deeply unpopular with existing shareholders. Between Q1 and Q3 of 2025 alone, the number of outstanding CRWV shares grew from 435.5 million to 497.6 million.
CoreWeave has also suffered from a cooldown in investor sentiment around high-flying AI stocks, especially those that still haven’t achieved profitability. Although AI enthusiasm has been responsible for the exceptional gains the market has seen in recent years, investors are beginning to rethink some of the assumptions around how much growth AI will produce and how long it will take for the technology’s potential to be realized.
CoreWeave’s acquisition activity has been another cause for concern among investors. CoreWeave announced acquisition plans for Core Scientific in July and OpenPipe in September, both of which worried shareholders. The Core Scientific acquisition, conducted as an all-stock deal at $9 billion, also tied into the existing worries about CoreWeave’s share dilution.
It’s also difficult to ignore the potential role of excessive valuation in CRWV’s selloff. At the end of June, around the time CoreWeave hit its all-time high, shares were trading at 28.0 times sales and 25.9 times book value. Though other factors have certainly played roles in exerting downward pressure on CoreWeave, this valuation likely already had the stock set up for a fall under anything less than a best-case scenario.
Putting all of these factors together, it isn’t difficult to see why CoreWeave has trended downward since mid-2025. The stock reached extremely high valuations at a time when investors were beginning to become somewhat more skeptical of AI. At the same time, management has heavily diluted its own stock and used dilution as a tool for financing acquisitions while the business is still losing money. These factors created something of a perfect storm for CRWV, though it’s worth noting that the stock appears to have stabilized and has even been able to regain some ground over the past month.
CoreWeave’s Positive
While the stock has faced quite a few pressures over the past several months, CoreWeave’s performance remains quite impressive. In Q3, for example, CoreWeave reported revenue of $1.36 billion, up from just $583.9 million in the year-ago quarter. The revenue backlog, meanwhile, nearly doubled to a total of about $55 billion, setting the business up for long-term revenue expansion as it works its way through its backlog.
Just as encouraging was the narrowing of CoreWeave’s net loss margin to (8) percent, a significant improvement on the (62) percent loss margin it reported in the same quarter of 2024. While net losses still totaled over $110 million, it’s fairly clear that CoreWeave is moving in the right direction and making respectable headway toward eventually achieving profitability.
CoreWeave has been able to secure agreements with some of the largest names in AI, creating what is likely to be a valuable customer base. In Q3, the business entered into a new agreement with Meta that was valued at over $14 billion. Though somewhat more concerning given the AI startup’s increasingly heavy list of obligations, OpenAI has also committed to a total of over $22 billion worth of CoreWeave’s computing capacity.
How Is CoreWeave’s Valuation Looking Today?
While CRWV still doesn’t look cheap, a combination of growth and declining share prices has brought its valuation down to significantly more reasonable levels than what it commanded in the middle of this year. Shares are currently at 9.1 times sales and 10.1 times book, both well under half of their mid-year high points.
Despite the pressures the stock faced in 2025, analysts remain relatively optimistic about CoreWeave. CRWV’s average price target is currently $127.70, implying nearly 62 percent worth of upside from the last price of $78.87. However, it’s worth noting that analysts have offered an extremely wide range of forecasts for CoreWeave, running from as low as $32 to as high as $200. The consensus rating on CRWV is also still a hold, potentially suggesting some apprehension about the business and its prospects.
Is CoreWeave a Buy on the Dip?
Right now, CoreWeave appears to fit the mold of a high-risk, high-return stock. Although analysts are still projecting quite a lot of upside for CRWV and the business is delivering promising gains in terms of both revenue and progress toward profitability, significant risks remain. Specifically, ongoing dilution by management and continued cooling of investor expectations around AI could both exert further downward pressure on CoreWeave going forward.
It’s also worth keeping in mind that CoreWeave is operating in an extremely high-growth industry, potentially giving it considerable tailwinds from AI development. With demand for computing capacity only growing and businesses racing to build data centers to meet that demand, CoreWeave’s AI-centric take on cloud computing could prove to be a valuable business model. Even this growth potential, however, could carry some risks, as there is growing concern of a bubble forming in the AI world. At the perceived center of this bubble is OpenAI, which could introduce pitfalls for businesses like CoreWeave that have significant commitments from the startup behind ChatGPT.
With its striking balance of positives and negatives, CoreWeave is likely a hold at the moment. The business is growing extremely well, but risks remain in the form of high valuation, growing questions about the value of AI and some potential missteps by management when it comes to stock dilution and acquisitions. CoreWeave could be a stock to watch, but the business may not yet have proven itself enough to make it a buy for most investors.
The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.