By Hannah Pedone
Wall Street has various questions about CoreWeave's new Meta deal and the company's financing plans
CoreWeave has agreed to provide compute to Meta through 2032.
The enthusiasm around CoreWeave's new deal with Meta Platforms has already faded.
The neocloud company announced Thursday that it had struck an expanded agreement with Meta Platforms (META) to provide the Facebook parent company with access to compute. The two parties had reached a $14.2 billion agreement back in September, but CoreWeave (CRWV) disclosed on Thursday that Meta has now committed to spend $21 billion through 2032.
CoreWeave's stock was up as much as 4.2% earlier in Thursday trading, but it then reversed lower to be down 0.9%.
The new contract will enable Meta to ramp up inference workloads, under the backdrop of &#34;surging demand&#34; for compute, according to a press release.
&#34;We are currently in a capacity land grab, and it's clear that Meta is taking advantage of all options,&#34; Bernstein analyst Madison Rezaei said in a note to clients.
CoreWeave CEO Michael Intrator said in a release that the expanded Meta arrangement is &#34;another example&#34; of how &#34;leading companies are choosing CoreWeave's AI cloud to run their most demanding workloads.&#34;
Read more: How CoreWeave's 'situationship' with Big Tech could cause a 30% stock drop
But some on Wall Street still have questions about the deal. For instance, Paul Meeks, managing director at Freedom Capital Markets, told MarketWatch that he will be looking to see if the deal will be financed at an &#34;investment-grade worthy&#34; cost of debt of under 6%. He's also wondering whether CoreWeave can finance and deliver on its &#34;aggressive&#34; AI buildout more generally.
And Bernstein analyst Madison Rezaei questions the sustainability of CoreWeave's hypersaler relationships. She believes that in the long term, customers like Meta and Microsoft won't rely on neoclouds like CoreWeave for capacity because data-center capacity will be less scarce.
&#34;This is a large deal and may bolster expectations in the near term, ahead of where we thought, but our views on the long-term sustainability of this model remain unchanged,&#34; Rezaei wrote on Thursday, following her bearish initiation last month.
See also: 'It's time to buy Meta.' Why Morgan Stanley sees 45% upside for the stock.
-Hannah Pedone
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CoreWeave's stock dipped 0.9% after an initial rise of 4.2% following the announcement of a $21 billion deal with Meta Platforms to provide compute through 2032. Despite the deal's potential to boost Meta's AI capabilities, analysts express concerns about CoreWeave's financing and long-term sustainability in the competitive cloud market. Questions remain regarding the cost of debt for the deal and the viability of CoreWeave's relationships with major clients like Meta and Microsoft.

- CoreWeave has expanded its agreement with Meta Platforms to provide $21 billion in compute services through 2032, up from the previous $14.2 billion.  
- While there was initial enthusiasm resulting in a stock price increase, concerns remain about CoreWeave's financing and long-term sustainability in an increasingly competitive market.  
- Analysts raise questions about the cost of debt and whether large clients like Meta will continue relying on CoreWeave as data center capacity becomes less scarce.

CoreWeave's stock dips as the hype around new Meta deal quickly subsides