CoreWeave shares surge over 26%, spark rally in battered AI cloud stocks

AI stocks climbed on Wednesday as Coreweave's strong performance and anticipation for Anthropic's upcoming IPO propelled the tech sector forward. Despite growing scrutiny over Nvidia and worries about the AI boom's expenses, Nasdaq 100 futures rose by 1.5 percent and S&P 500 futures increased by 0.6 percent. Nvidia-backed cloud computing firm Coreweave saw its shares surge about 14 percent in pre-market trading, driven by a 168 percent rise in third-quarter revenue to $3.66 billion, surpassing analysts' expectations.

The company projected between $13 billion and $13.3 billion in revenue for the year, and reduced its quarterly loss to $1.27 per share. Coreweave's CEO, Michael Intrator, deemed the quarter a "breakout", anticipating approximately $9 billion in customer prepayments and deposits over the next three months. The improved results eased concerns about the company's finances, which had plummeted over 40 percent in the past month due to questions about debt financing for data center expansion.

Coreweave held $35.6 billion in debt as of June, and borrowing costs have surged. Despite the positive outlook, Susannah Streeter, chief investment strategist at Wealth Club, noted that high debt levels and intricate financing arrangements remain a concern. The recovery extended to other AI infrastructure companies, such as Nebius and Iren, as investors balanced strong customer demand with the high cost of constructing new data centers.

Anthropic's valuation increased as banks reviewing the company's IPO considered raising its worth to $1.5 trillion or more following robust investor interest. The planned IPO would see Anthropic selling 825 million shares between $70 and $78 apiece, potentially raising $64.4 billion and estimating the company's value at around $1.4 trillion.

The IPO would also attract additional investments of $26 billion from tech giants like Google, Microsoft, and Nvidia. Nvidia, supporting Anthropic's infrastructure, is reportedly contributing $10 billion, underscoring the financial interdependence between AI developers and their computing infrastructure providers. Anthropic has disclosed nearly $900 billion in future computing commitments, while rival OpenAI reported $10 billion in third-quarter revenue, a near 50 percent increase from the previous quarter.

Meanwhile, Nvidia shares rose around five percent in pre-market trading following a five-fold loss in market value over two sessions, following allegations that chief executive Jensen Huang had an affair with a woman suspected of ties to Chinese intelligence. Nvidia has hired Wachtell, Lipton, Rosen & Katz and former federal prosecutor Joon Kim to investigate potential breaches of confidential information or national security.

The company has stated no evidence suggests confidential data was compromised. Nvidia is also facing a proposed shareholder lawsuit, and Morgan Stanley removed it from its top stock picks on Wednesday.