This Nvidia-Backed Artificial Intelligence (AI) Unicorn Is About to Go Public. Here Are 2 Reasons I Won't Be Investing.

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Adam Spatacco, The Motley Fool

Sun, Mar 23, 2025, 7:00 AM 5 min read

For galore people, investing successful the banal marketplace is the astir effectual mode to physique wealth. Unless you're an accredited investor, accessing opportunities successful backstage companies is rare. That said, each present and again, a backstage institution becomes ample capable that investors see the imaginable of an archetypal nationalist offering (IPO).

Private companies that person eclipsed a valuation of $1 cardinal oregon much are often referred to arsenic unicorns successful the fiscal world. CoreWeave, an artificial quality (AI) start-up with the fiscal backing of nary different than Nvidia (NASDAQ: NVDA) , recently filed its S-1 with an expected valuation of astir $24 billion.

While the operation of AI, enactment from Nvidia, and a highly anticipated IPO mightiness dependable similar a look for making a fortune, present are 2 reasons wherefore I won't beryllium chasing CoreWeave's IPO.

The array beneath breaks down CoreWeave's gross implicit the past fewer years. While these figures are undoubtedly impressive, there's much than meets the oculus here.

Metric

2022

2023

2024

Revenue	$15.8 million	$228.9 million	$1.9 billion
Revenue maturation (YOY)	Not available	1,349%	737%

Data source: CoreWeave S-1 Filing. YOY = twelvemonth implicit year.

When analyzing fiscal statements, investors tin sometimes go enamored by a company's gross maturation to the constituent that they disregard immoderate important underlying details. Sure, increasing gross implicit 700% and eclipsing $1 cardinal successful yearly income are terrific milestones, but wherever is this maturation really coming from?

According to notes successful CoreWeave's S-1, 41% and 73% of gross successful 2022 and 2023, respectively, was concentrated successful 3 customers. Furthermore, 77% of gross successful 2024 came from lone 2 customers.

CoreWeave goes connected to disclose that its largest lawsuit (Microsoft) accounted for 16%, 35%, and 62% of income betwixt 2022 and 2024. These trends not lone suggest immoderate utmost levels of lawsuit concentration, but CoreWeave's largest lawsuit is efficaciously driving the bulk its growth. In different words, if Microsoft churns arsenic a lawsuit oregon decides to downgrade its contract, past CoreWeave's maturation would protract successful a meaningful way.

Another important portion of fiscal investigation is looking past gross and studying the remainder of the income statement. The 3 large fiscal statements -- income statement, equilibrium sheet, and connection of currency flows -- are intertwined. Below, I've outlined immoderate cardinal details that stuck retired to maine successful CoreWeave's fiscal profile.