Critics point out that the company is financing a huge infrastructure buildout with relatively expensive debt, while its current earnings on that asset base remain very small. CoreWeave has roughly $46.7 billion of net PP&E and about $35 billion of debt, much of which carries effective borrowing costs in the 8–10% range. Its latest quarterly adjusted operating income was about $128 million, or roughly $512 million annualized, equivalent to only about 1.1% of its current PP&E base. That is not technically ROIC, and roughly $11.9 billion of the asset base is still construction in progress, so the comparison understates the potential earnings of assets that have not yet come online. can they ultimately generate returns on this infrastructure comfortably above its financing costs once utilization increases? With more than $100 billion of contracted backlog, does the model eventually produce sufficiently high margins and asset utilization to justify the leverage, or do high interest costs, depreciation, and rapid GPU obsolescence make that difficult? I see a lot of critiques with their business model I don’t really see the issue what am I missing? submitted by /u/Genzinvestor16180339
Originally posted by u/Genzinvestor16180339 on r/ArtificialInteligence
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