CoreWeave (CRWV) shares sank 6.86% to $56.60 on Nov. 12, giving back some of the gains from the previous session after Nvidia (NVDA) CEO Jensen Huang abruptly resigned.
The decline came just one day after CoreWeave shares surged 24.71% on better-than-expected third-quarter earnings and a stronger full-year revenue forecast.
CoreWeave is closely tied to Nvidia, which supplies the powerful graphics processing units used in its AI data centers and owns a roughly 13% stake in the company.
CoreWeave investors are now worried about what Nvidia’s leadership change could mean for its relationship with CoreWeave.
Nvidia CEO Jensen Huang resigns amid scandal
Nvidia announced on Nov. 12 that Huang had resigned as president, CEO and a member of its board, effective immediately.
The company appointed Chief Financial Officer Colette Kress as interim CEO while its board searches for a permanent replacement.
Harvey C. Jones was also named Nvidia’s first-ever board chairman.
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Huang’s departure followed reports about his alleged affairs involving two employees and an outside woman suspected of being a spy. The allegations have raised concerns about Nvidia’s corporate governance and its business dealings with China.
Nvidia shares dropped roughly 5% on Thursday as the leadership shakeup added to pressure on the AI chipmaker, whose stock had already fallen more than 30% from its recent peak.
The chipmaker is both a major supplier and investor in CoreWeave, making the cloud company’s growth closely tied to Nvidia’s business decisions.
Investors are also concerned about CoreWeave’s financing needs as it spends heavily to expand its AI computing capacity.
A separate report that CoreWeave was seeking at least $4 billion in new loans to purchase additional Nvidia chips added to the pressure.
CoreWeave stock surged 25% after strong earnings
CoreWeave’s latest selloff followed a sharp rally on Nov. 11, when the stock jumped 24.71% to $60.77 after the company reported strong third-quarter results.
The company released its earnings on Nov. 10, after the market closed.
Third-quarter revenue rose 168% from a year earlier to $3.66 billion, beating Wall Street expectations. CoreWeave also raised its full-year revenue forecast to between $13 billion and $13.3 billion.
Related: CoreWeave stock plunges 12%, but Wall Street analyst says buy the dip
Its revenue backlog reached $132.5 billion at the end of September, up from $104 billion at the end of June, showing continued demand for AI computing capacity.
CoreWeave also said it expects to receive about $9 billion in customer prepayments and deposits over the next three months, helping fund its data center expansion.
The company expects to reach adjusted profitability in the first half of 2028.
The results helped ease concerns about CoreWeave’s debt and the sustainability of AI infrastructure spending.
However, the optimism was short-lived as Huang’s resignation triggered another selloff across the AI sector on Thursday.
Related: How much Nvidia stock does ex-CEO Jensen Huang actually own?
What’s next for CoreWeave stock?
CoreWeave’s heavy spending remains a concern for investors despite its strong revenue growth.
The company reported $46.9 billion in total debt at the end of September and expects capital expenditures of $37 billion to $39 billion for the full year.
Its expansion depends on continued demand for AI computing and access to financing at manageable costs.
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Nvidia’s leadership transition raises another question for investors, particularly whether the chipmaker will continue to back AI infrastructure companies as aggressively as it did under Huang.
Nvidia is scheduled to report its fiscal third-quarter earnings on Nov. 17, which could provide more clarity about the company’s plans under interim CEO Kress.
Barclays cuts CoreWeave price target despite strong earnings
Barclays lowered its price target on CoreWeave to $85 from $105 while maintaining an Equal Weight rating, according to The Fly.
Despite the lower target, the firm said CoreWeave’s “strong” third-quarter results and greater clarity around its funding needs could help the stock recover.
Barclays pointed to accelerating revenue growth, annual recurring revenue above Wall Street expectations, and better visibility into future financing needs as positives for the company.
The note was published before Huang’s resignation was announced.
As of Nov. 12’s close, CoreWeave stock is down more than 20% year-to-date.
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