Investing.com -- S&P Global Ratings has assigned a ’B+’ issuer credit rating to CoreWeave Inc., a New Jersey-based provider of generative AI infrastructure, software, and cloud services. The company’s outlook is stable, reflecting expectations of continued growth over the next year. CoreWeave is issuing $1.5 billion of senior unsecured notes for general corporate purposes, which have been given a ’B’ issue-level rating and a ’5’ recovery rating, indicating modest recovery prospects for lenders in the event of default.

The credit rating reflects CoreWeave’s solid market position as a key provider of generative AI infrastructure, cloud services, and software. The company’s rapid growth and solutions are driven by its purpose-built for AI cloud infrastructure, which uses the latest generation of Nvidia (NASDAQ: NVDA ) Corp’s graphic processing units (GPUs). This infrastructure is in high demand by AI labs, hyperscalers, and large enterprise customers that require significant AI workload processing.

CoreWeave’s platform has a significant first-mover advantage in the rapidly growing AI infrastructure market. The company’s cloud infrastructure is optimized for training and inference tasks, offering higher utilization than traditional general-purpose cloud provider solutions. This technical differentiation, along with the ability to rapidly deploy the latest GPUs, has made CoreWeave a preferred partner for compute-intensive AI workloads.

However, as AI demand and infrastructure investment grow, the technical differentiation gaps are expected to narrow as competitor offerings improve. Major hyperscalers are leveraging their strong balance sheets to rapidly scale AI-dedicated infrastructure, potentially reducing some of CoreWeave’s early advantages.

CoreWeave serves its customers under long-term take-or-pay contracts, providing revenue visibility for the next few years. As of the end of 2024, CoreWeave reported approximately $15.1 billion in remaining performance obligations and a revenue backlog of $25.9 billion as of March 31, 2025.

Despite being a capital-intensive business, CoreWeave has managed to rapidly scale its operations, serving the largest and most influential companies. The company’s strategic relationship with NVIDIA has been instrumental in securing large, long-term take-or-pay agreements with tier 1 customers.

However, the company’s significant supplier and customer concentration could pose a risk in the future. NVIDIA provides CoreWeave’s GPUs, and only three suppliers accounted for over 76% of the company’s total purchases. In 2024, 62% of revenue came from Microsoft (NASDAQ: MSFT ).

CoreWeave expects new contract wins to fuel strong growth in 2025 and 2026, likely resulting in significant free operating cash flow (FOCF) deficits. The company’s operating model is capital-intensive following new contract wins as it purchases GPUs and builds out its data center capacity.

Potential liquidity risks may arise from the put option rights of certain shareholders. CoreWeave granted put rights to former holders of series C convertible preferred stock, covering 29,874,066 shares. These rights entitle holders to require the company to repurchase their shares for cash if the stock fails to trade at or above 175% of the $38.95 issue price for any 30 consecutive trading days within two years post-IPO or if these shares are sold or transferred.

CoreWeave is working to address and remediate material weaknesses in its internal controls over financial reporting through IT risk assessments, enhanced control frameworks, and an expanded finance and accounting staff. Efforts will continue through 2026.

S&P Global Ratings could lower the ratings on CoreWeave if it expects the company to sustain funds from operations (FFO) to debt below 12% with cash flow from operations (CFO) to debt below 10%, or if its liquidity tightens. They could also raise the rating if the company continues to execute profitably on its revenue backlog while diversifying its customer base with new multiyear contracts and maintaining its success-based capital expenditures strategy.

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