Shares of CoreWeave took a hard hit after news broke that Meta Platforms is building a cloud business to sell spare AI computing power.Â
The tech stock fell sharply over two trading sessions last week, and is currently valued at a market cap of $64.4 billion.
Notably, Meta (META) is one of CoreWeave’s (CRWV) biggest customers. The two companies, who were partners last month, are now competing in a rapidly expanding market. Â
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Meta’s move rattles CoreWeave investors
According to CNBC, Meta will sell its unused computing power to other enterprises, a plan first reported by Bloomberg.Â
Meta is still deciding whether to offer full access to AI models running on its servers or simply rent out raw computing power to other companies.Â
Meta has not publicly confirmed the plan. Still, Meta CEO Mark Zuckerberg hinted at this possibility months ago.Â
He told investors during the company’s Q3 earnings call that a move into cloud services was “on the table.”Â
He repeated that message at Meta’s annual shareholder meeting in May, saying that if the company ends up with more AI infrastructure than it needs, “that is an option that we have.”
Meta plans to spend up to $145 billion this year building data centers and buying graphics processing units (GPUs) needed to train and run AI models.Â
Turning unused capacity into a new revenue stream would ease pressure on that massive spending, pushing Meta stock higher following the news.Â
SpaceX has struck deals with Anthropic, which pays $1.25 billion a month for capacity, and Google, which pays $920 million a month, per CNBC.
What it means for CoreWeave’s business model
According to Reuters, Meta is one of CoreWeave’s largest customers, with a total contract commitment of around $35 billion, including a $21 billion deal that runs through December 2032.Â
Meta could either host AI models that developers pay to use or sell GPU access directly. If it hosts AI models, the tech giant primarily competes with software services. However, if Meta sells GPU access, it would compete with CoreWeave and peers such as Nebius.Â
CoreWeave is part of the neocloud market, which is growing rapidly. A research report from Mordor Intelligence projects the total addressable market to expand from $24 billion in 205 to $236.5 billion in 2031, indicating a compounded annual growth rate of over 45%.Â
In Q1 of 2026, CoreWeave more than doubled its revenue, which indicates it is outpacing broader industry growth and gaining market share.Â
“Q1 was a transformational quarter for CoreWeave. We delivered our strongest quarter for customer bookings, signing more than $40 billion of new commitments and growing contracted revenue backlog to nearly $100 billion.”
Analysts tracking CoreWeave stock forecast revenue to increase from $5.13 billion in 2025 to $82 billion in 2030, representing a 74% CAGR.Â
Even if Meta enters the GPU access market, CoreWeave has enough room to keep growing over the next decade.Â
Mark Zuckerberg could unlock a new revenue stream for MetaTom Williams/Getty Images
CoreWeave executives have downplayed the threat before
CoreWeave leadership has addressed competition worries at investor conferences this year, before the Meta cloud news broke.Â
Speaking at Bank of America’s Global Technology Conference in June, CoreWeave Chief Strategy Officer Nicholas Robbins said hyperscalers like Microsoft have told him they eventually plan to build all their AI capacity in-house.Â
He said the risk is “highly limited,” noting that Microsoft accounted for 85% of CoreWeave’s revenue backlog at its IPO but is no longer even its largest customer.
At JPMorgan’s Global Technology conference in May, CoreWeave Chief Development Officer Brannin McBee addressed a similar deal involving Blackstone and Google building out TPU cloud capacity.Â
More Meta:
He called it “yet another demand signal” for AI infrastructure rather than a threat, adding that CoreWeave’s clients specifically ask for Nvidia GPUs, not the chip architecture other cloud providers are building around.
McBee also cautioned that signing up power and land does not automatically translate into revenue.Â
He said building and operating GPU infrastructure at scale is “intensely difficult,” and that CoreWeave’s software platform, called Mission Control, is what allows it actually to deliver billable computing hours rather than just promises.
Is CRWV stock undervalued?
CoreWeave still carries real financial risk. The company holds close to $25 billion in long-term debt and leases against under $4.8 billion in stockholder equity, and it continues to post net losses as it builds out infrastructure.Â
The company is still unprofitable and is forecast to report a cumulative free cash outflow of over $80 billion through 2030.Â
Valued at a price-to-sales (2026) ratio of five times, CoreWeave is not too expensive given its growth estimates.Â
Out of the 24 analysts covering CoreWeave stock, 14 recommend “Buy”, nine recommend “Hold,” and one recommends “Sell”. The average CoreWeave stock price target is $132, indicating 62% upside from current levels.Â
Whether Meta becomes a true rival or stays a customer that occasionally resells spare capacity, the AI infrastructure race is far from settled.
For now, CoreWeave’s executives are betting that scale, technology, and its relationship with Nvidia will keep it ahead of the pack.
