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Goldman Sachs analyst Kash Rangan discusses how AI will act as a 'force multiplier' for the software industry, dispelling concerns that it will eviscerate software companies, and provides insights on companies like Salesforce, CoreWeave, Oracle, and Snowflake amidst ongoing discussions about an AI bubble. Technology Sector Navigates AI Transformation as Goldman Sachs Projects 'Force Multiplier' Effect U.S. equities are closely observing the evolving narrative surrounding Artificial Intelligence and its profound implications for the software industry. Goldman Sachs analyst Kash Rangan has positioned AI not as a disruptive force, but as a "force multiplier" for software, a perspective that aims to alleviate prevailing concerns about the technology's potential to diminish established software companies. This assessment comes amidst an ongoing market debate regarding an "AI bubble," a discussion particularly pronounced in private investment markets. The Event in Detail: AI as a Catalyst for Software's Rebirth Kash Rangan's analysis draws a compelling parallel between the current AI wave and the advent of web browsers in the 1990s. At that time, many feared browsers would dismantle the existing software ecosystem; however, they ultimately became a foundational gateway that significantly expanded the industry's scope. Rangan asserts that AI will similarly "synergize with software," simplifying its logic and enhancing its intrinsic value. He maintains that the software industry is poised for a "rebirth" driven by AI integration. Several key players in the software landscape are under scrutiny as the AI transformation unfolds: Salesforce (CRM): Goldman Sachs views Salesforce as possessing investment value, contingent on the growth of its AI product, Agentforce. A substantial increase in its customer base could alleviate the "valuation pressure" that has weighed on its stock price. Oracle (ORCL): The company recently reported robust fiscal year 2026 first-quarter results. Total Remaining Performance Obligations surged 359% year-over-year to $455 billion, with total quarterly revenues rising 12% to $14.9 billion. Cloud revenues demonstrated significant growth, up 28% to $7.2 billion. However, software revenues experienced a slight decline of 1%. CoreWeave (CRWV): Highlighted as a high-leverage bet on AI infrastructure, CoreWeave showcased explosive revenue growth of 207% in Q2 2025. Yet, the company reported widened net losses of $290 million, primarily due to substantial interest expenses associated with its capital-intensive expansion. Its market capitalization soared from $14.2 billion at its March 2025 IPO to $57.76 billion by August 2025, reflecting a price-to-sales (P/S) ratio of 18.5x, significantly exceeding the 6.2x average for its AI cloud peers. Analysts express caution regarding its debt sustainability and potential margin compression. ServiceNow (NOW): The company reported outstanding Q2 2025 results, with subscription revenue growth of 21.5% and expanded operating margins. Management underscored the increasing adoption of AI-powered solutions, with CEO William McDermott stating, "ServiceNow's Q2 results were outstanding. They continue our long track record of elite level execution, and we are at the forefront of enterprise AI." The company raised its full-year outlook, targeting over $15 billion in subscription revenue by 2026. Analysis of Market Reaction: Differentiating AI Valuations The discussion around an "AI bubble" continues to resonate within financial markets. However, analysis suggests this phenomenon is more pronounced in private markets, where venture capital funding has driven AI company valuations to elevated levels, with median revenue multiples ranging from 25x to 30x Enterprise Value to Revenue for 2025. In contrast, many publicly traded application software companies are currently experiencing "valuation troughs" or are "valuation depressed." Citi analysts emphasize that AI is not causing a complete disruption of the software industry but rather an "acceleration of industry differentiation," leading to a "winner-takes-all" environment. This shift poses a significant challenge to traditional Software-as-a-Service (SaaS) models reliant on seat-based charging. Data illustrates this growing divergence: software companies with growth rates exceeding 20% have seen their median enterprise value-to-revenue (EV/Revenue) valuation almost double since 2022 to 11.7 times, while those with growth rates below 10% have stagnated around 4.9 times. Concerns about overvaluation in some segments of the AI market have been echoed by prominent figures. OpenAI CEO Sam Altman has voiced apprehension regarding investor "overexcitement," suggesting that current sentiment may be pushing valuations beyond sustainable levels. Companies such as Palantir (PLTR) and CrowdStrike (CRWD), with P/E ratios of 501 and 401 respectively, are cited as examples of potentially overvalued entities. Broader Context and Implications: The Road Ahead for Software The "AI revolution" represents a culmination of years of development, with the launch of generative AI models like ChatGPT serving as a pivotal moment that reoriented investor and founder focus. The current market environment necessitates a clear distinction between companies that effectively integrate and commercialize AI and those that do not. Those that adapt are expected to experience reaccelerated growth and rising valuations. Infrastructure providers, such as CoreWeave, are positioned for substantial benefit from the AI boom, but their path is marked by considerable capital intensity and associated debt risks. The current public market valuations for many existing software companies indicate a period of recalibration, where the long-term impact of AI on profitability and business models is still being assessed. Looking Ahead: Growth, Profitability, and Strategic Adaptation As the software industry continues to evolve under the influence of AI, key factors for investors to monitor include the reacceleration of growth for existing software firms, the ability of AI to translate into tangible bottom-line profits, and the ongoing investment in AI infrastructure. The intersection of AI with other transformative technologies such as IoT, robotics, and machine learning is also expected to drive future innovation, efficiency gains, and new revenue streams. The coming quarters will likely provide further clarity on how companies are navigating this transformative period, with a continued focus on those that can demonstrate sustainable growth and profitability through strategic AI adoption and innovation. Oracle's impressive RPO backlog and CoreWeave's ambitious expansion plans underscore the significant capital and strategic maneuvers underway in the AI-driven tech landscape.
Goldman Sachs managing director Kash Rangan posits that artificial intelligence will act as a "force multiplier" for the software sector, ushering in a period of rebirth rather than obsolescence. This perspective suggests a significant shift in investor focus from AI hardware to application layers, potentially impacting valuations of public software companies and prompting scrutiny of private AI firms. Goldman Sachs Analyst Bets AI Will Give Software Companies a 'Rebirth' U.S. equities are poised for a notable shift in investment strategy within the technology sector, as a leading voice from Goldman Sachs champions artificial intelligence (AI) as a catalyst for a renaissance in software. Kash Rangan, a managing director at the investment bank, argues that AI will serve as a "force multiplier" for software, contrary to fears of its disruptive potential, ultimately leading to a rebirth of the sector. The Event in Detail: AI as a Force Multiplier for Software Rangan’s thesis suggests that the integration of AI into software will drive unprecedented growth, potentially reversing years of stagnation. He draws a parallel between AI’s current impact and the internet browser’s effect on software in the 1990s, where it expanded the industry significantly. This perspective comes as investors begin to look beyond the initial hype surrounding AI hardware to focus on the application layers where AI can deliver tangible value. In this evolving landscape, Rangan highlights several established SaaS companies as promising investment opportunities, recommending Salesforce (CRM), Intuit (INTU), Adobe (ADBE), and ServiceNow (NOW). These firms, he suggests, are well-positioned to leverage AI to enhance software functionalities, automate complex tasks, and revitalize their offerings. Additionally, Rangan identifies CoreWeave (CRWV) as a speculative, high-leverage bet on the AI infrastructure theme. CoreWeave, which recently debuted on NASDAQ, has seen its shares more than double since its March 2025 initial public offering. The company reported strong performance in Q2 2025, with revenue surging 207% year-over-year to $1.213 billion, marking its first quarter exceeding a billion dollars. A substantial 98% of this revenue stemmed from long-term contracts, contributing to a robust revenue backlog of $30.1 billion. Analysis of Market Reaction and Broader Implications Rangan’s analysis could significantly re-orient investor sentiment, directing focus and capital towards public software companies. This shift is predicated on AI’s ability to make software more intuitive and efficient, generating new monetization avenues and expanding user bases. Goldman Sachs research supports this view, with estimates suggesting generative AI technologies could boost global GDP by 7% over a decade. While optimism surrounding AI is high, Rangan clarifies that concerns about an "AI bubble" are more pertinent to private markets than to established public software firms. Valuations for private AI startups, such as OpenAI and Anthropic, have indeed soared, with OpenAI reportedly boosting its valuation to $500 billion and Anthropic reaching $183 billion through recent funding rounds. These figures underscore intense investor appetite for early-stage AI plays, contrasted with the more mature and financially established public software sector. However, CoreWeave presents a unique blend of hyper-growth and financial risk. The company has aggressively pursued debt financing to fuel its expansion, with total capital commitments now exceeding $25 billion, including a $2.6 billion delayed draw term loan facility in July 2025. This strategy has resulted in a significant debt load of $11 billion against $1.1 billion in cash, incurring high interest expenses, projected at approximately $1 billion annually. Despite its rapid revenue growth, CoreWeave’s valuation has seen some normalization, compressing from over 35x forward sales at IPO to approximately 12x as of September 2025, though this remains elevated compared to the cloud infrastructure sector median of roughly 3x EV/sales. Risks for CoreWeave include customer concentration, with one client accounting for 72% of sales, and the inherent challenges associated with heavy leverage tied to aggressive capital expenditure plans. Expert Commentary > "AI will be a 'force multiplier' for software, not a destroyer," stated Kash Rangan, emphasizing his belief that AI will lead to a software renaissance. His perspective is echoed by Goldman Sachs economists Joseph Briggs and Devesh Kodnani, who highlight how AI breaks down barriers between humans and machines, fostering innovation in software. Marco Argenti, Goldman Sachs' chief information officer, foresees AI evolving into hybrid workers and expert models by 2025, transforming software into intelligent partners. Looking Ahead Investors will be closely monitoring the adoption rates of AI-driven software solutions, with Goldman Sachs projecting accelerated AI investments exceeding 2024 expectations. While the "rebirth" narrative positions software at the forefront of the AI revolution, potential risks remain. Goldman Sachs analysts have previously warned of an "inevitable slowdown" in AI spending, which could pressure stock valuations, potentially leading to a market dip if major tech firms reduce capital expenditures. For companies like CoreWeave, long-term sustainability will depend on improvements in its capital structure and diversification of its customer base. The interplay between innovation, market sentiment, and prudent risk assessment will ultimately define the tech economy's trajectory in the coming years.
CoreWeave (NASDAQ: CRWV) reported significant revenue and backlog expansion in Q2 2025, driven by surging demand for AI infrastructure. Despite strong operational metrics, the company continues to navigate high capital expenditures and significant interest expenses, leading to a widened net loss. CoreWeave Reports Substantial Revenue Growth Amid Aggressive AI Infrastructure Expansion CoreWeave (NASDAQ: CRWV), a specialized AI infrastructure provider, announced robust financial results for the second quarter of 2025, showcasing significant revenue growth and an expanding sales backlog. These figures underscore the company's position within the rapidly growing AI infrastructure sector, even as it manages substantial capital investments and associated costs. Strong Q2 2025 Performance Highlights Rapid Expansion In the second quarter of 2025, CoreWeave reported revenues of $1.213 billion, marking a substantial 207% increase year-over-year. This achievement represents the company's first quarter surpassing the billion-dollar revenue mark. Crucially, over 98% of this revenue was derived from long-term contracts, signaling a stable and predictable revenue stream. The company's revenue backlog swelled to $30.1 billion, an 86% increase from the prior year, primarily fueled by expansions with existing major customers, including a $4 billion expansion deal with OpenAI and new hyperscaler contracts. Adjusted EBITDA for the quarter reached $753 million, boasting a 62% margin and tripling Q2 2024 levels, indicative of strong operational efficiency. Adjusted operating income also saw a significant rise to $200 million, a 134% increase year-over-year with a 16% margin. Market Response and Valuation Dynamics Despite the impressive top-line growth and operational metrics, CoreWeave's stock experienced a modest decline of 3.03% in after-hours trading following the announcement, suggesting that investors may have held even higher expectations. This recent movement follows a prior period where the stock had fallen nearly 50% post-IPO, a downturn attributed to early insider selling and the expiry of lock-up periods rather than a deterioration of fundamental performance. The company's valuation has consequently compressed from over 35x forward sales at its IPO to approximately 12x forward EV/sales today, or 16x trailing EV/sales. While these multiples remain elevated compared to the cloud infrastructure sector median of 3x EV/sales, the correction suggests a normalization in market perception despite CoreWeave's sustained hypergrowth trajectory. Strategic Investments Drive Future Growth, Impacting Near-Term Profitability CoreWeave's strategic imperative to meet the unprecedented demand for AI computing resources necessitates aggressive capital expenditures. The company recorded $2.9 billion in capital expenditures in Q2 2025, a record for the firm, reflecting its significant investment in scaling its platform. This includes increasing its total contracted power by approximately 600 MW to 2.2 GW. Management's strategy clearly prioritizes market position and scale over immediate profitability, a decision evident in the widened net loss of ($290.509) million for the quarter, and an adjusted net loss of ($130.8) million. High interest expenses, amounting to $530 million in the first half of 2025, with rates reaching up to 15%, further weigh on the company's profitability and highlight a key financial risk. Broader Context: AI Infrastructure Boom and Associated Risks CoreWeave operates as an "AI Hyperscaler," providing cloud solutions crucial for accelerated computing. The company's rapid growth is a direct reflection of the broader AI sector's expansion. CoreWeave has positioned itself at the forefront by being the first to offer the complete NVIDIA Blackwell GPU portfolio at scale. However, this high-growth, capital-intensive model introduces specific risks, including potential powered shell shortages, customer concentration among a limited number of AI labs, and substantial leverage tied to its aggressive $20–23 billion CapEx plans. While current market sentiment remains bullish for short-term momentum, the long-term sustainability hinges on improvements in its capital structure and diversification efforts. Outlook: Continued Growth with Capital Structure Scrutiny Looking ahead, consensus estimates project CoreWeave's revenues to reach $5.25 billion in 2025, $11.99 billion in FY26, and $17.22 billion in FY27. These optimistic forecasts suggest significant future growth. Based on these projections, a Price-to-Sales (P/S) multiple of 6x for FY27 could imply an approximate valuation of $103 billion, a substantial increase from its current market capitalization of approximately $46 billion. Investors will closely monitor the company's ability to manage its high interest expenses and heavy debt load, as well as its efforts to diversify its customer base, while continuing to capitalize on the robust demand for AI infrastructure.", imagealttags=[
Nvidia has made a significant investment in CoreWeave, an AI data center company and key customer, signaling its commitment to bolstering the rapidly expanding artificial intelligence infrastructure ecosystem. U.S. technology giant Nvidia (NVDA) has substantially increased its investment in CoreWeave (CRWV), an AI data center company, allocating 91% of its $4.3 billion stock portfolio to the firm. This strategic move underscores Nvidia's commitment to fortifying the foundational infrastructure essential for advanced AI development and deployment. The Event in Detail Nvidia's latest regulatory filings reveal a holding of approximately 24.28 million shares of CoreWeave, valued at approximately $3.959 billion at the close of the quarter. This position represents the overwhelming majority of Nvidia's investment portfolio and marks an increase in shares held from the previous quarter. CoreWeave specializes in providing Nvidia GPU cloud leasing services, crucial for AI model training and high-performance computing workloads. The company gained attention earlier this year by listing on the Nasdaq in late March. Post-listing, its stock initially saw a significant appreciation of approximately 318% but has since retreated sharply due to concerns over surging losses and revised guidance. CoreWeave is also anticipated to face a notable test with its first large-scale share unlock event post-IPO. Analysis of Market Reaction Nvidia's deepening ties with CoreWeave, which date back to at least 2020, are a clear indication of its strategy to secure and enhance the supply chain for its cutting-edge GPUs. This partnership provides Nvidia with a critical avenue to bolster the broader AI sector by ensuring robust cloud infrastructure for its market-leading chips. CoreWeave has been at the forefront of adopting Nvidia's latest hardware, including being the first cloud provider to deploy Nvidia's Blackwell Ultra (GB300 NVL72) GPUs, designed for intensive AI workloads. Financially, CoreWeave has demonstrated aggressive growth. Its second-quarter 2025 revenue surged 206% year-over-year to $1.21 billion, contributing to a 276% year-over-year revenue growth in the first half of 2025. The company also reports a substantial contract backlog exceeding $30 billion. However, this growth has come at a significant cost. CoreWeave reported a net loss of $291 million in Q2 2025, with a first-half 2025 loss of $1.73 per share. The company's rapid expansion has necessitated substantial borrowing, resulting in a current debt (due within 12 months) of approximately $3.6 billion and long-term debt of around $7.4 billion. Its debt-to-equity ratio stands at 286%, and interest expenses have notably increased, reaching over $530 million in the first half of 2025, up from $107 million in the same period of 2024. Capital expenditures have also been significant, totaling $2.9 billion in Q2 2025 alone, with projections to exceed $20 billion for the full year. This aggressive spending aims to meet the soaring demand for AI infrastructure, with CoreWeave's CFO, Nitin Agarwal, stating: > "Our growth continues to be capacity constrained with demand outstripping supply." Despite the rapid revenue growth, CoreWeave trades at a market capitalization exceeding $47 billion, representing approximately 10 times forward sales. Some analysts suggest that a Price-to-Sales (P/S) ratio above 40x would be considered excessive unless revenue growth consistently surpasses 50% year-over-year, indicating a premium valuation for CoreWeave. Broader Context & Implications CoreWeave's strategic positioning in the AI cloud infrastructure market is reinforced by its recent all-stock acquisition of Core Scientific (CORZ) for $9 billion. This acquisition provides CoreWeave with significant data center power capacity and aims to eliminate substantial future lease obligations and generate annual cost savings. By owning more data centers, CoreWeave seeks to optimize power usage, reduce latency, and repurpose existing infrastructure for high-performance computing, aligning with the burgeoning demand for AI workloads. However, CoreWeave's financial model presents several risks. Its revenue streams are highly concentrated, with Microsoft accounting for 60% of its revenue and the top two customers collectively representing 77%. This client dependency poses a critical risk, as any shift by these key clients, such as building their own infrastructure, could significantly impact CoreWeave's financial health and ability to service its considerable debt. The GPU-as-a-service market is also becoming increasingly competitive, with over 150 providers, and established hyperscalers like Microsoft, Amazon, and Google possess stronger balance sheets that allow them to fund AI expansion with less debt pressure. This raises questions about CoreWeave's long-term competitive "moat." Expert Commentary Market observers hold mixed opinions on CoreWeave's prospects. While the company's first-mover advantage in deploying cutting-edge Nvidia GPUs and its substantial backlog suggest strong potential, its high debt levels and ongoing losses are points of concern. One analyst indicated: > "I think investors can buy the stock for the more speculative part of their portfolio." However, another cautioned: > "The high dependence on industry growth and reliance on debt prevent me from recommending a large position at this time." Some research firms express skepticism about the company's long-term sustainability, highlighting a potentially precarious financial model fueled by dependencies and rapid expansion that may not be entirely sustainable. Looking Ahead The trajectory of CoreWeave will largely depend on its ability to convert its impressive contract backlog into sustainable profitability while effectively managing its substantial debt load and associated interest expenses. Investors will closely monitor the company's operational efficiency, its capacity to diversify its customer base, and its resilience against increasing competition in the AI infrastructure space. The ongoing demand for AI workloads will remain a critical factor in CoreWeave's growth prospects, as will the company's performance following its upcoming share unlock event.
The current price of CRWV is $120.47, it has decreased 0.02% in the last trading day.
CoreWeave Inc belongs to Technology industry and the sector is Information Technology
CoreWeave Inc's current market cap is $58.8B
According to wall street analysts, 23 analysts have made analyst ratings for CoreWeave Inc, including 5 strong buy, 7 buy, 15 hold, 3 sell, and 5 strong sell
Looks like you're a bit late to the party, fren. CoreWeave's recent pump isn't from today's news but is the aftershock of last week's announcement that they're launching a venture capital arm to throw money at AI startups. The market ate it up, and the stock is still digesting that 16% surge.
The primary driver for CoreWeave's (CRWV) recent price action was a significant strategic announcement made last week, which continues to influence investor sentiment.
The Catalyst: CoreWeave Ventures On Tuesday, September 9, 2025, CoreWeave announced the launch of CoreWeave Ventures, a new initiative to invest in and support AI startups. This move signals the company's intent to build a deeper ecosystem around its core AI cloud infrastructure business. The market reacted very positively, with the stock surging over 16% the following day, Wednesday, September 10th. The price movement you're seeing today is a continuation of that momentum and market repositioning.
Analyst & Social Sentiment The move was well-received by both retail and institutional players. Social chatter, particularly on platforms like Stocktwits, spiked with positive sentiment following the announcement. This aligns with Wall Street's view, where 23 analysts currently have a consensus "BUY" rating on the stock. The mean analyst price target is $124.92, suggesting some further upside from its current price of around $120.43.
Technical Picture Currently, real-time technical indicators like RSI, MACD, and key moving averages are unavailable due to data feed issues. Without this data, a precise technical entry or exit signal for today is difficult to determine. The price is consolidating after a major upward move, which is typical market behavior.
The news is out and priced in. Now the real game is figuring out if this is a new support level or just a top before early investors take profit. Don't be their exit liquidity, bro.