Stone Fox Capital
Founder, CIO & Portfolio Manager of Stone Fox Capital
CoreWeave's improving per-megawatt economics shorten chip payback, bolstering its ability to repay debt. Cantor Fitzgerald estimates revenue has risen from $10-11M/MW at IPO to nearly $20M/MW, contribution margins from about 15% to 25-30%, and chip payback has fallen from four years to 2-2.5 years. Deutsche Bank forecasts about $10B in next-12-month operating cash flow, but also sees $45B of required capex and a funding gap. x.com x.com x.com x.com
Rising GPU rental rates and Anthropic's compute margins challenge claims of collapsing demand for CoreWeave's capacity. The WSJ reported Anthropic's first-half revenue of $16.3B against $9B in compute and infrastructure spending; Bloomberg reported its Q3 compute margin above 40%. Long contracts and fully amortizing loans cushion demand declines but cap upside. Despite the challenging neocloud model, CoreWeave's risk/reward is by far the best and its quality well ahead of peers. x.com x.com … Show more
Compute rental can produce operating profits, validating the neocloud case for CoreWeave, Nebius and Applied Digital. SPCX's reported data point counters last week's CoreWeave-Anthropic hit piece on AI demand. x.com
CoreWeave faces brutal competition from SpaceX, and competing in AI models or data centers requires cash at scale. SpaceX is already trashing CoreWeave and Cerebras in this contest. x.com
CoreWeave looks positioned to be one of the biggest beneficiaries of years of demand for GPU computing at scale. It should be one of the most important players in the AI infrastructure buildout, with Jensen Huang and Nvidia deeply tied to it. At $50 a share, its debt load is not a concern; the stock could look like one of the best buying opportunities by decade-end. x.com x.com
Cerebras faces brutal competition from SpaceX, and competing in AI models or data centers requires cash at scale. SpaceX is already trashing Cerebras and CoreWeave. x.com
SpaceX's near-monopoly in global satellite internet, built on reusable rockets, should generate enormous cash flow to partly fund its AI compute buildout. Those cash flows should strengthen its credit profile and let it finance the rest more cheaply than pure-play neoclouds CoreWeave, Nebius and IREN, which SpaceX makes obsolete. Grok ensures deployed compute earns revenue if customers back out. There is no reason to own a pure-play neocloud when SpaceX is available. x.com x.com
CoreWeave may have a downside backstop because Nvidia needs a competing neocloud ecosystem on its stack as hyperscalers and leading frontier labs shift spending toward custom ASICs. The personal bet is that Nvidia would step in if CoreWeave gets into trouble. Bernstein thinks intervention in a true downside would raise the floor, though not necessarily re-energize the stock. x.com
Improving per-MW pricing, falling cost of capital and stronger-than-expected demand from Anthropic and OpenAI make CoreWeave one of three absolute favorite stocks on a massive sale. Its short-term deals can command 3-4 times the pricing of long-term contracts. x.com
CoreWeave's financing looks more vulnerable amid a debt-market pullback for AI-data-center-dependent companies. Elon Musk says access has almost entirely shut off in recent weeks for firms without substantial revenue outside AI data centers, and expects few of the 200-plus neoclouds to survive consolidation. x.com
SpaceX's cheap capital and hardware execution give its compute buildout an edge over neoclouds and megacaps. It is quickly becoming the world's largest compute supplier: its 2033 bonds pay 5.65% versus 9.625% on CoreWeave's 2032 notes, and it deployed 110,000 GB300s at Colossus II in 64 days. It targets 10GW to "maybe" 20GW in 2027. One of Anthropic's biggest compute suppliers, SpaceX has up to $120.5B in estimated commitments through 2029, cancellable on 90 days' notice after early 2027. x.com