Jeffrey Emanuel, the former crypto executive and blogger who recently captured Wall Street’s attention by warning of the competitive threat posed by Chinese AI startup DeepSeek to Nvidia, is now raising concerns over CoreWeave upcoming IPO.
Earlier this year, Emanuel’s analysis of DeepSeek’s cost efficiencies contributed to a staggering $600 billion drop in Nvidia’s market value in a single day. His insights gained recognition from financial circles across Wall Street and Silicon Valley. Now, Emanuel is voicing skepticism about CoreWeave Inc., the New Jersey-based cloud services provider set to go public in the coming weeks.
CoreWeave experienced a remarkable 747% revenue surge in 2024 by operating data centers for AI companies. Despite this, Emanuel remains unconvinced about its long-term prospects, likening the company to WeWork, the office-sharing firm that collapsed after a dramatic valuation drop. He warns that on leased data centers, rather than owning them, exposes it to significant financial risk if AI-related spending declines.
“If CoreWeave’s revenue growth slows and it struggles to meet its lease obligations, it could face a serious cash crunch,” Emanuel said, drawing parallels to WeWork’s downfall.
CoreWeave has priced its shares between $47 and $55 for the IPO, aiming to raise approximately $2.5 billion with a market cap of around $25 billion. While this valuation is lower than the $35 billion some expected, Emanuel believes it remains excessively high. He estimates CoreWeave’s fair valuation at no more than $3 billion.
However, not all market observers share Emanuel’s view. Matthew Kennedy, an analyst at Renaissance Capital, highlighted CoreWeave as the largest AI-focused IPO to date. Kennedy suggested investors may find the opportunity attractive given the increasing demand for AI computing power.
Emanuel also pointed to CoreWeave’s significant customer concentration risk. Microsoft, which accounts for 62% of CoreWeave’s revenue, has announced plans to expand its own AI data centers, potentially reducing reliance on CoreWeave. D.A. Davidson analyst Alexander Pratt echoed these concerns, noting that Microsoft’s investments could limit CoreWeave’s growth potential.
Furthermore, Emanuel questioned CoreWeave’s claims of proprietary technology, arguing that its AI infrastructure management software lacks differentiation. “There are ample open-source alternatives available,” he remarked.
CoreWeave recently announced an $11.9 billion contract with OpenAI, but Emanuel remained skeptical, citing the absence of crucial financial details in the deal.
While CoreWeave’s revenue grew to $1.9 billion in 2024 from $229 million in 2023, its losses also widened to $863 million. The company’s 242-page prospectus outlined numerous risk factors, including revenue concentration and the need to remain competitive in a rapidly evolving AI landscape.
Emanuel, who currently has no financial position in CoreWeave, said he hopes his warnings will help retail investors avoid overvalued investments. “This IPO seems like an opportunistic play on AI hype,” he concluded, “and I believe investors should proceed with caution.”
