Is the AI chip market landscape about to change? CoreWeave (CRWV.US) issues sudden warning: abandoning exclusive use of Nvidia chips will come at a high cost

According to Zhitong Finance APP, artificial intelligence (AI) cloud infrastructure provider CoreWeave (CRWV.US) has warned investors that if the company is forced to abandon the exclusive use of Nvidia (NVDA.US) AI chips and switch to other solutions, it may require considerable time and capital investment.

In a regulatory filing on Wednesday, CoreWeave stated that changes in customer demand could force the company to invest "time, investment, and resources" to obtain alternatives to Nvidia Graphics Processing Units (GPUs). The company cautioned in the document that ultimately, this could impact its ability to provide customers with the products they need.

Nicknamed “Nvidia’s favored son,” CoreWeave is one of a new breed of “next-generation cloud computing service providers.” These companies operate by renting cutting-edge cloud-based AI computing infrastructure powered by Nvidia GPUs. As the world’s largest AI chip manufacturer, Nvidia is a close partner of CoreWeave and owns a 10% stake in the company. All GPUs currently provided by CoreWeave to customers are supplied by Nvidia.

However, many customers with significant AI computing needs are working to reduce their reliance on Nvidia AI chips by developing their own. OpenAI, one of CoreWeave’s largest clients, has already unveiled its first AI accelerator built using Broadcom (AVGO.US) technology. Nevertheless, at present, Nvidia remains the undisputed market leader.

CoreWeave’s updated statement shows that some insiders are envisioning a scenario where Nvidia’s dominance in AI workloads may eventually diminish. This information was included in the “risk factors” section of the company’s quarterly earnings report. Companies typically list hypothetical scenarios in this section that could impact their operations.

It is worth noting that in December last year, CoreWeave executive Nick Robbins stated that client demand for Nvidia technology remains “overwhelmingly dominant.” However, he also emphasized: “If one day we start to hear substantially different messages from clients—and it’s not just an occasional phone call asking what you think about a particular technology—then this could change our behavior.”

AI Cloud Demand Continues to Surge! Backlog Orders Exceed $104 Billion, Full-Year Outlook Raised

CoreWeave’s latest earnings report, released on Tuesday, showed second-quarter revenue of $2.58 billion, up 112% year-on-year and exceeding the analyst consensus of $2.56 billion. The result hit the high end of the company’s previously given guidance range of $2.45 billion to $2.6 billion.

In terms of profitability, the company posted a net loss of $626 million for the second quarter, mainly due to massive interest expenses incurred from infrastructure expansion—the net interest expenses for the quarter reached $640 million, more than double the figure from a year ago. The loss per share was $1.14, still significantly better than the analyst estimate of a $1.41 loss per share. Adjusted EBITDA reached $1.51 billion, also exceeding the analyst consensus of $1.43 billion. Adjusted operating income was within management’s previously stated range of $30 million to $90 million.

Although losses expanded year-on-year — net loss was $290 million in the same period last year — the loss was narrower than market expectations, indicating that the company has maintained a certain degree of financial discipline amid rapid expansion. As for debt levels, by quarter-end, CoreWeave’s balance sheet showed total debt of $35 billion, mainly used to pay for Nvidia GPUs and other equipment. Interest expenses in the first quarter had already reached $536 million, more than eleven times adjusted operating income, highlighting the financial strain of its high-leverage expansion model.

The most encouraging data from CoreWeave’s second-quarter earnings report is that backlog orders reached approximately $104 billion, up 246% year-on-year and continuing to climb from $99.4 billion at the end of the previous quarter. The company also revealed that, at the beginning of July, it gained more than $25 billion in net new customer commitments, meaning the actual backlog is far greater than $104 billion.

Regarding order conversion, the company expects about 36% of outstanding performance obligations to be converted to revenue within 24 months, implying an annualized revenue pool of about $17.8 billion, far exceeding the midpoint of its fiscal 2026 revenue guidance of $12.5 billion. Analysts noted that the continually growing backlog indicates that “demand for artificial intelligence remains robust.”

In terms of client expansion, this quarter Meta committed an additional $21 billion to CoreWeave; Anthropic signed a multi-year agreement; and quantitative trading giant Jane Street committed $6 billion. CoreWeave’s other major customers include OpenAI and Microsoft. The company also announced cooperation with defense contractor Leidos to provide secure AI cloud services for US federal agencies.

CoreWeave expects third-quarter revenue to be between $3.45 billion and $3.6 billion, with a midpoint of $3.525 billion representing approximately 158% year-on-year growth. Data shows analysts previously expected revenue at the lower end of this range.

Based on strong demand momentum, CoreWeave also raised its full-year outlook: 2026 annual revenue guidance was raised from $12-13 billion to $12.4-13.2 billion, while analysts previously projected annual revenue of $12.63 billion. Adjusted operating profit forecast was raised from $900 million-$1.1 billion to $960 million-$1.15 billion. Annual capital expenditures were raised from $31-35 billion to $35-39 billion.

As one of the few newly-listed cloud computing suppliers, CoreWeave’s results are seen as a key barometer for overall AI computing demand. Its above-expectations performance confirms the ongoing boom in AI infrastructure investment.

As AI infrastructure investment transitions from an “arms race” to “structural growth,” CoreWeave, leveraging its deep partnership with Nvidia, more than $100 billion in contracted backlog, and a constantly expanding global data center footprint, is emerging as the most representative “next-generation cloud” bellwether in this multi-trillion-dollar wave of AI infrastructure. As CEO Mike Intrator put it, the company has reached a tipping point where “scale starts to translate into operational leverage”— the key question going forward is whether CoreWeave’s $35 billion in debt can be converted into sustainable profitability quickly enough against the backdrop of surging demand.