Remember when everyone was convinced that every AI company was basically printing money? Well, someone just threw a wrench into that narrative, and it’s about to get interesting.
CoreWeave—the AI infrastructure darling that’s been on a rocket ship since going public in March (we’re talking a 200%+ surge, folks)—just got a reality check from Kerrisdale Capital. And when I say reality check, I mean the kind that involves a 90% price target cut. Ouch.
Here’s the tea: Kerrisdale just dropped a short report that basically says “Hey, maybe renting out GPUs isn’t the revolutionary business model everyone thinks it is.” Their brutal assessment? CoreWeave should be trading at $10, not the current price that’s making early investors feel like crypto millionaires.
The short-seller’s argument is pretty straightforward once you cut through the finance-speak. They’re saying CoreWeave is essentially a fancy equipment rental company that’s been dressed up as the next big tech innovation. Think of it like this: if AI is the gold rush, CoreWeave is selling shovels—but so is everyone else, and their shovels aren’t particularly special.
“CoreWeave isn’t pioneering the future of AI—it’s a debt fueled GPU rental business with no moat, dressed up as innovation,” Kerrisdale wrote. Translation: They’re basically saying this company is all sizzle, no steak.
The timing is particularly spicy because while CoreWeave has been riding high, its bigger competitors have been landing the whale contracts. Microsoft just dropped $17.4 billion on a deal with Nebius, and Oracle’s been making it rain with massive revenue forecasts. Meanwhile, CoreWeave is watching from the sidelines like the friend who didn’t get invited to the cool party.
Kerrisdale’s main gripes? CoreWeave lacks the secret sauce that makes a tech company truly valuable: proprietary technology, defensible intellectual property, and any real edge in solving the power constraints that are choking the AI sector. In other words, they’re saying anyone with enough cash could theoretically do what CoreWeave does.
The financial critique gets even more brutal. Kerrisdale claims CoreWeave is actually destroying shareholder value because it generates returns below its cost of capital. That’s finance-speak for “this company is burning money faster than it’s making it.”
Now, before you start feeling too bad for CoreWeave, remember that short-sellers aren’t exactly known for their optimism. They make money when stocks go down, so take their doom-and-gloom predictions with a grain of salt. But their core argument—that not every AI company deserves to be valued like the next Google—isn’t exactly wrong.
The real question is whether the AI infrastructure space is big enough for everyone to win, or if we’re about to see some serious consolidation. Either way, CoreWeave’s wild ride just got a lot more interesting.
CoreWeave hasn’t responded to the report yet, but you can bet they’re working on a comeback that’ll make this whole drama even more entertaining.