So CoreWeave went public and everyone lost their minds. The AI infrastructure company shot up over 200% since March, because apparently anything with “AI” in the description gets investors more excited than a kid in a candy store. But hold up – someone just crashed the party with a reality check.
Enter Kerrisdale Capital, the short-seller equivalent of that friend who tells you your crypto investment is actually just digital Monopoly money. They dropped a report this week basically saying CoreWeave is worth about as much as a used iPhone – specifically, they think it should trade at $10, which would be a 90% haircut from current prices. Ouch.
Here’s the tea: Kerrisdale isn’t saying AI is bogus (they’re not that contrarian). They’re saying CoreWeave is basically a fancy GPU rental service dressed up like the next Tesla. “CoreWeave isn’t pioneering the future of AI — it’s a debt fueled GPU rental business with no moat, dressed up as innovation,” they wrote. That’s the financial equivalent of calling someone out for wearing designer knockoffs.
The short-seller’s beef is pretty straightforward. While everyone’s getting hyped about “insatiable AI demand,” CoreWeave’s biggest customers are literally giving massive contracts to their competitors. Microsoft just dropped $17.4 billion on Nebius, and Oracle’s making it rain with their own AI deals. Meanwhile, CoreWeave is sitting there like the friend who didn’t get invited to the group chat.
But here’s where it gets spicy: Kerrisdale says CoreWeave has zero competitive advantages. No secret sauce, no proprietary tech, no special powers – just expensive GPUs they’re renting out while drowning in debt. It’s like running an Uber for computers, except the cars cost millions and everyone else is building their own fleet.
The financial reality check is even more brutal. According to the short-seller, CoreWeave is generating returns below their cost of capital, which in finance speak means they’re literally destroying money instead of making it. That’s like opening a lemonade stand where each cup costs you $2 to make and you sell it for $1.50 – great for customers, terrible for your wallet.
Now, CoreWeave hasn’t responded to these accusations yet (probably too busy updating their LinkedIn to “It’s complicated”). But this whole situation highlights something important about the AI gold rush: not every company riding the wave actually knows how to surf.
The broader lesson? Just because a company has “AI” in their pitch deck doesn’t mean they’ve cracked the code. Sometimes a GPU rental business is just a GPU rental business, even if it’s wearing a fancy AI costume to the party.
Whether Kerrisdale is right or just being dramatic remains to be seen. But in a market where AI stocks have been treated like they’re made of pure gold, maybe it’s time someone asked if the emperor is actually wearing any clothes.