Morgan Stanley: CoreWeave Adds Record 500MW Capacity in Single Quarter, High Debt and Customer Concentration Weigh on Valuation

TechFlow reports, according to TechFlow Research, Morgan Stanley's August Q2 earnings report pointed out that CoreWeave added 500MW of net active power in a single quarter, exceeding any quarter in history, more than three times year-over-year. Management reiterated the goal of reaching at least 8GW before 2030. The midpoint of FY26 revenue guidance was raised by 2% to $12.4 billion to $13.2 billion, and the midpoint of ARR was raised by 3% to $18.5 billion to $19.5 billion. The company raised the midpoint of full-year capital expenditure guidance by 12% to $35.5 billion to $39 billion, with Q3 capital expenditure guidance at $11.5 billion to $13.5 billion, higher than the market expectation of $10 billion. The ARR of the Managed Inference platform (managed inference platform) grew from $1 million to over $100 million, and is expected to reach at least $250 million by the end of the year.

The research report judged that Q2 adjusted operating profit margin was about 8%, higher than expected, but Q3 profit margin guidance of 5.8% to 7.2% was lower than market expectations, and Q4 profit margin needs to increase significantly to achieve full-year guidance. Morgan Stanley expects CoreWeave's FY27 operating profit margin to be 15.9% and FY28 to be 22.4%, with free cash flow remaining negative until 2028, and debt expected to increase to about $38 billion by the end of 2026. Morgan Stanley maintains an Equal-weight (in line with the market) rating and a $99 target price, believing that GenAI data center demand is strong, but high debt and customer concentration are key constraints preventing valuation breakthroughs.