Stock market surges with Dow Jones gaining 463 points, boosted by increased chances of interest rate reduction
After CoreWeave's Q2 2025 earnings report, the stock has experienced a significant decline, dropping almost 40% since the announcement on August 12, 2025. Despite reporting record revenue growth of $1.2 billion, up 207% year-over-year, and securing major contracts including a $4 billion expansion with OpenAI, investor concerns about the company's aggressive expansion strategy and high leverage have caused notable selling pressure.
CoreWeave's financial results showed explosive revenue growth driven by strong demand for AI cloud services, AI training, and inference workloads. The company reported a contracted backlog of $30.1 billion, and secured notable clients such as OpenAI, Jane Street, and Morgan Stanley.
However, the market reacted negatively to the company's high expenses and aggressive capacity expansion plans. CoreWeave ended Q2 with nearly 470 MW of active power, planning to expand to over 900 MW by year-end, alongside contracted power arrangements growing to 2.2 gigawatts.
Jane Street Group's announcement of a 5.4% stake in CoreWeave (nearly 20 million shares) briefly lifted the stock price by about 4.7% intraday on August 21, 2025, but the stock ultimately closed slightly down, indicating ongoing investor caution. The stock price has fallen about 50.5% from its recent high of $183.58 on June 20 to about $95 shortly after earnings, reflecting significant market wariness regarding the company’s near-term profitability amid its hypergrowth phase.
In summary, CoreWeave’s market performance after the Q2 report reflects strong business metrics but investor apprehension about its aggressive capital deployment and leverage, leading to a sharp share price decline despite major strategic wins and robust demand for AI infrastructure.
Meanwhile, the tech-focused IPO of Bullish, which is backed by Peter Thiel, took place today. The IPO was priced at $37 per share, and the stock opened at $90, reaching an intraday high of $118. However, at the close of trading, Bullish stock settled at $68. The S&P 500 also closed at a new record high of 6,466, an increase of 0.3%, while the tech-heavy Nasdaq Composite closed at 21,713, a new record high.
Elsewhere, Cava Group reported lower-than-anticipated same-store sales of 2.1% and cut its full-year same-store sales forecast. Despite this, William Blair analyst Sharon Zackfia maintained an Outperform (Buy) rating on Cava Group, indicating a positive outlook despite the missed Q2 comps.
In the economic sphere, the Federal Reserve is expected to lower the federal funds rate by a quarter-percentage point at its next meeting in September, according to CME FedWatch. The odds of a more aggressive rate cut (half a percentage point) have risen to 4.1% from zero.
[1] CoreWeave Q2 2025 Earnings Report [2] CoreWeave Q2 2025 Earnings Call Transcript [4] CoreWeave Q2 2025 Investor Presentation
- The regulation of cryptocurrency trading within the finance sector is of concern for investors, as aggressive expansion strategies and high leverage by companies like CoreWeave have raised questions about near-term profitability amid hypergrowth phases.
- In the crypto industry, business growth is increasingly being driven by technology advancements in AI cloud services, AI training, and inference workloads, with companies securing major contracts from clients like OpenAI and Morgan Stanley.
- Despite the promising potential of technology-focused businesses, such as Bullish, the volatile market can lead to significant share price fluctuations, as demonstrated by its IPO performance, which opened at $90 but closed at $68, hinting at cautious investor attitudes during the earnings season.
