3 Reasons to Sell CoreWeave Stock in 2026

• CoreWeave operates on the pick-and-shovel side of the AI opportunity, supplying cloud computing services for enterprise clients.

• The company’s low margins and high expenses could increase its long-term risk.

• 10 stocks we like better than CoreWeave ›

Generative AI is one of the most explosive tech megatrends in recent memory, promising to change the way people live and do business. But that doesn’t mean every AI company will be a long-term winner. Based on the challenges that cloud infrastructure provider CoreWeave (NASDAQ: CRWV) is facing, it might be time to sell the stock.

At the end of the day, companies exist to make profits for their shareholders. When this doesn’t happen — or worse, when it looks like it might never happen — that is cause for alarm. CoreWeave’s operational results put it in this category. While its net revenue in the third quarter soared by an eye-popping 133% year over year to $1.36 billion, the devil is in the details.

While its revenues are growing fast, so are its expenses. In fact, CoreWeave’s third-quarter operating expenses stood at $1.31 billion, giving it an operating margin of just 4% compared to 20% in the prior-year period. The company also faces significant and growing interest expenses due to its reliance on debt financing to buy hardware and build its data centers. When this is factored in, CoreWeave generated a net loss of $110 million in Q3, or a loss of $0.22 per share.

These numbers might sound shocking for a tech company, because the industry usually has high margins. For example, AI infrastructure giant Nvidia usually boasts operating margins above 50%. And CoreWeave isn’t even selling physical products that it has to manufacture or ship. However, its operational weakness begins to make more sense when you look more closely at its problematic business model.

Unlike Nvidia, which designs and sells the graphics processing units (GPUs) needed to train and run generative AI large language models, CoreWeave operates as a middleman. It buys these high-priced GPUs and deploys them in clusters, which it rents out to end users via its cloud computing platform. But due to GPU demand that well exceeds supply, Nvidia has extreme pricing power, and customers like CoreWeave must bear the brunt of that.

A single advanced AI accelerator can cost tens of thousands of dollars, and CoreWeave is buying thousands of them. This dynamic exposes the company to massive depreciation expenses as the hardware ages, becomes outdated, and must eventually be replaced. CoreWeave is also funding a lot of its hardware purchases with debt, which creates interest expenses. As of the end of the third quarter, the company had $10.3 billion in non-current debt — up 89% from the prior-year period. And it faced interest expenses of $310.6 million, further impeding its long-term profit potential.