Can "Nvidia's own protégé" become the "savior" of AI trading?

Just a week ago, many market participants still believed that this round of AI-driven stock market rally had "come to an end".

Judging from recent market performance, the global AI computing power industrial chain has been hit by continuous negative news: the Nasdaq Index fell 5.3% in October, and dropped another 5.52% in a single day on November 5, posting its largest single-day decline since April 2025; the next day, the South Korean stock market triggered a decline circuit breaker during intraday trading; in the A-share market, the share price of optical module manufacturer Zhongji Xuchuang (300308.SZ) closed at 448 yuan on November 6, down more than 67% from its year-to-date high in June.

After U.S. stock market hours on November 10 Eastern Time, U.S. computing power rental company CoreWeave (CRWV.O) released its financial report for the third quarter of 2026. The financial report shows that CoreWeave achieved revenue of 3.66 billion U.S. dollars in the quarter, a year-on-year increase of 168%, and raised its full-year revenue guidance.

CoreWeave has received multiple investments from NVIDIA (NVDA.O), and is known in the market as "NVIDIA's favorite child". In this recent round of stock market decline, it is one of the companies hardest hit, with its share price falling by more than 40% in the month before the financial report was released.

After the release of CoreWeave's financial report, global AI computing power stocks rebounded. On November 11, A-share listed companies Zhongji Xuchuang and Eoptolink (300502.SZ) rose by 15.07% and 16.97% respectively, both posting their largest single-day gains of the year; the South Korean and Chinese Taiwan stock markets rose by 2.6% and 3.6% respectively. After U.S. stocks opened that night, CoreWeave's share price once rose by about 20% during intraday trading, and NVIDIA, which had fallen for two consecutive days before, also rebounded.

The reason why the financial report of a computing power rental company can drive the global market is largely because it responded to one of the most worrying issues for investors recently, that is, whether the demand for AI computing power has slowed down.

As for whether CoreWeave can become the "savior" of this round of AI trading, there are still different views in the market.

Continuous Negative Market News

In the more than one month after the National Day holiday, the global AI computing power industrial chain hardly received any good news, and market concerns spread from demand to capital and policies.

In early October, public information showed that the annualized revenue data provided by OpenAI to investors was close to 50 billion U.S. dollars, lower than the previous market expectation of nearly 70 billion U.S. dollars. OpenAI is one of the world's largest computing power buyers, and doubts immediately arose about whether the huge computing power orders it signed can be fulfilled as scheduled, and the share prices of companies such as NVIDIA and Oracle fell in response.

In late October, U.S. tech giants released their financial reports one after another, and the free cash flow of Amazon, Alphabet and Meta in the third quarter of 2026 was all negative. When the huge AI investment can be recovered began to be questioned by investors, and Alphabet's share price fell by more than 12% on October 29.

At the same time, U.S. inflation remained at a high level, and market expectations for the Federal Reserve to raise interest rates continued to heat up, leading to higher corporate financing costs. Computing power rental companies that build data centers by taking on debt were the first to face pressure. Taking CoreWeave as an example, as of the end of September 2026, its debt size was close to 47 billion U.S. dollars, and the interest expense in the third quarter alone reached 846 million U.S. dollars; in early November, the yield of some of its bonds once rose to more than 16%. The bond yield rising to such a level indicates that creditors have doubts about its solvency.

On November 3, the U.S. midterm elections ended, and the Democratic Party won control of the Senate and the House of Representatives. The market thus ushered in the "Blue Wave Shock", and investors believed that the construction of U.S. AI data centers would face more restrictions. According to UBS estimates, about 30% of the new data center capacity expected to be added in the U.S. by 2028 may be affected by potential construction suspension measures.

On November 5, the market value of S&P 500 constituent stocks evaporated by about 3 trillion U.S. dollars in one day, and NVIDIA's share price fell by 9.26% in a single day. On November 6, market sentiment spread to Asia, the Korea Composite Index closed down 6.02%, and Zhongji Xuchuang fell by about 9% that day.

Since November 9, personal turmoil of NVIDIA CEO Jensen Huang has triggered market sell-offs, and within two trading days, NVIDIA's market value evaporated by more than 430 billion U.S. dollars.

In addition, negative factors including OpenAI's revenue, tech giants' cash flow, financing costs and the "Blue Wave Shock" are interacting with each other - the more the share price falls, the more difficult it is for computing power companies to raise funds; the more difficult it is for computing power companies to raise funds, the more the market worries that data centers will be difficult to complete; the slower the data center construction progresses, the more pessimistic the market's expectations for upstream chip and equipment orders will be.

As a result, all kinds of market concerns eventually point to one question: does AI computing power really need so much construction?

Computing Power Remains in Short Supply

Companies that rent out computing power are often the first to detect whether computing power demand is slowing down.

CoreWeave's business is to purchase NVIDIA's Graphics Processing Units (GPUs), build data centers, and then rent computing power to customers such as OpenAI, Microsoft and Meta according to contracts. Whether customers still need computing power and what price they are willing to pay will be reflected in its orders and quotations.

In this round of decline, CoreWeave, due to its high debt and large-scale ongoing data center construction, is the type of company that the market is most worried about. In January 2026, NVIDIA once made an additional investment of 2 billion U.S. dollars in it at a price of 87.20 U.S. dollars per share. As of the close on November 10, CoreWeave's share price was 48.73 U.S. dollars, which was significantly lower than NVIDIA's shareholding price. If its financial report falls short of expectations, the market's concerns about the AI computing power chain may further deepen.

But CoreWeave's performance exceeded its previously released guidance: in the third quarter of 2026, its revenue increased by more than 1 billion U.S. dollars compared with the previous quarter, higher than the upper limit of guidance; adjusted operating profit was 379 million U.S. dollars, while the previous guidance range was 200 million to 260 million U.S. dollars. CoreWeave also raised its full-year revenue guidance to 13 billion to 13.3 billion U.S. dollars.

"It beat the expectations of all institutions and everyone." A communications industry analyst at a large brokerage firm in South China commented on this financial report to the Economic Observer reporter. He believes that CoreWeave's revenue and profit are both better than market expectations, and after computing power stocks have fallen for more than a month in a row, such a financial report has a very obvious boost to market sentiment.

At the financial report conference call, CoreWeave CEO Michael Intrator said: "The growth of computing power demand is faster than the ability to deliver these infrastructures." According to him, the effective demand received by CoreWeave is equivalent to 10 times the production capacity it can provide before the end of 2027, and its production capacity up to 2027 has been almost sold out. Financial report data also shows that as of the end of September 2026, CoreWeave's on-hand orders were about 132.5 billion U.S. dollars, a year-on-year increase of 138%.

In response to concerns about overcapacity in the industry, Intrator responded that a large amount of computing power infrastructure is indeed being put into the market, but AI is spreading across all industries at a faster pace. He also mentioned that 10% of Fortune 500 companies in the U.S. are already CoreWeave's customers, and more than half of the new customers added in 2026 come from industries outside the AI and technology sectors.

In terms of pricing, Intrator said that CoreWeave raised the prices of all types of products by 25% in July 2026, and raised them by another 10% in the late third quarter. After entering the fourth quarter, prices are still rising.

In addition, regarding NVIDIA's two generations of GPUs, Ampere and Hopper, although they were released in 2020 and 2022 respectively and are no longer the latest products, according to Intrator's introduction, in the third quarter of 2026, the computing power rental prices of these two generations of GPUs at CoreWeave rose by 30% to 50% month-on-month respectively. Generally speaking, if there is a surplus of computing power, older generation chips will cut prices first.

Intrator also mentioned that in 2027, more than 130,000 GPUs of CoreWeave will expire under their contracts, and the renewal of this part of the contracts alone can bring an annualized revenue increment of nearly 4 billion U.S. dollars, without additional capital expenditure.

In addition, CoreWeave's data centers are still under expansion. As of the end of September 2026, its contracted power capacity exceeded 4.6 gigawatts (GW), of which more than 1.7 gigawatts were put into operation, the relevant data centers are yet to be built, and the procurement of relevant equipment will continue.

At least from the information in CoreWeave's financial report, there is no sign of computing power surplus yet.

On November 11, the A-share computing power industrial chain also rebounded. In addition to Zhongji Xuchuang and Eoptolink, optical device manufacturer TFC (300394.SZ) rose by 13.96%, and optical chip manufacturer Source Photonics (688498.SH) hit the 10% daily price limit.

Market Pressure Remains

However, apart from demand, there are still negative factors in capital and policy that weigh on AI computing power stocks.

CoreWeave's data centers are mainly built with borrowed funds. When the yield of its bonds rose sharply in early November, the market worried that the company might not be able to borrow enough money later. But CoreWeave stated in its financial report that it expects to receive about 9 billion U.S. dollars in customer prepayments and deposits in the next three months.

Intrator also said at the conference call that at the current yield level, CoreWeave will not raise funds through the unsecured bond market, "and there is no need to do so".

In other words, part of the funds CoreWeave needs to build data centers is paid in advance by customers, and it does not rely on the bond market in the short term.

CoreWeave CFO Nitin Agrawal also said at the conference call that the next loan linked to customer contracts is expected to have a financing cost of 7% to 7.5%. He also said that the cash flow brought by existing customer contracts is sufficient to repay the corresponding debt; if only the already signed orders are delivered, CoreWeave's capital expenditure in 2027 will be the same as that in 2026, while revenue will increase significantly, and adjusted net profit is expected to turn positive in the first half of 2028.

The premise for the cycle of falling share prices, harder financing and slower construction to take effect is that computing power companies really cannot borrow money. At least according to CoreWeave's statement, this situation has not yet occurred.

Regarding the policy risks brought by the "Blue Wave", Intrator said that all projects CoreWeave plans to deliver in 2027 have obtained all permits and are under construction, and are not expected to be affected by changes in the regulatory environment. He also mentioned that if data center construction across the industry slows down, the completed computing power will become even scarcer.

However, the negative factors weighing on AI computing power stocks have not been completely eliminated - the U.S. core inflation data for October released on November 10 was higher than market expectations, further heating up market expectations for the Federal Reserve to raise interest rates in December; it is still unclear how far the restrictions on data center construction by U.S. states will go; the NVIDIA board's investigation into Jensen Huang has not yet reached a conclusion.

For CoreWeave itself, its net loss in the third quarter of 2026 was 709 million U.S. dollars, higher than 110 million U.S. dollars in the same period of the previous year.

Bernstein, a research institution, pointed out in a research report released after the release of CoreWeave's financial report that this is almost the best quarterly report CoreWeave can deliver, but once the computing power shortage situation eases, CoreWeave will still be one of the first and most severely impacted companies.

In the past more than a month, the reasons why the capital market sold AI computing power stocks kept changing, from OpenAI's revenue, cloud vendors' cash flow, to financing costs and the "Blue Wave Shock", and what has actually been doubted all along is the demand for computing power.

A single financial report from one company is not enough to answer all questions. Whether CoreWeave can become the "savior" of this round of AI trading still needs to be tested by more companies' financial reports and a longer period of time.

This article is from the WeChat official account "Economic Observer", written by Zheng Chenye, published with authorization from 36Kr.