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Will CoreWeave's Margins Continue Expanding Through 2026?
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Key Takeaways
CoreWeave expects adjusted operating margins to expand sequentially, reaching the low teens in Q4.
Q2 contracts carried margins 5-10 points higher, while Blackwell and Vera Rubin pricing hit new highs.
Storage, CPU, networking and software topped $400 million in ARR, adding to margin-accretive growth.
CoreWeave, Inc. (CRWV - Free Report) appears well-positioned for continued margin expansion through the remainder of 2026, as increasing scale, stronger contract economics and higher-margin offerings begin to translate into greater operating leverage. In the second quarter, the company’s adjusted operating margin expanded to 5% from 1% in the prior quarter, while adjusted operating income increased to $128 million from $21 million. Management said the improvement came as operating leverage began to take effect, despite the company continuing to incur significant ramp costs.
The company expects this improvement to continue sequentially in the second half of the year. CoreWeave guided third-quarter adjusted operating income of $200 million to $260 million and expects margins to continue expanding, reaching the low teens in the fourth quarter. For full-year 2026, the company raised its adjusted operating income guidance to $960 million-$1.15 billion, and revenue guidance to $12.4 billion-$13.2 billion. The company also raised its expected year-end annualized run-rate revenue to $18.5 billion-$19.5 billion.
Recent customer contracts are also supporting the margin outlook. CoreWeave stated that contracts signed in the second quarter carried contribution margins 5 to 10 percentage points higher than those added in recent quarters. Pricing and margins for Blackwell and Vera Rubin SKUs were setting new highs, while prior-generation SKUs continued to command strong pricing. Management also highlighted the growth of margin-accretive businesses such as storage, CPU, networking and software, which exceeded $400 million in ARR in the second quarter.
Scale is another key factor supporting the expansion. As CoreWeave’s installed base grows, each new deployment becomes a smaller portion of the overall base while contracted revenue from existing deployments remains in place. On the last earnings call, management stated this is helping transform scale into operating leverage and is why margins expanded in the second quarter. The company expects this trend to continue in the third quarter and the fourth quarter.
CoreWeave is also seeing margin expansion from its newer Vera Rubin platform from the outset, with management stating that a significant portion of the recent 5-10% margin improvement is coming from the Vera Rubin SKU.
Taking a Look at CRWV’s Competitors
Microsoft’s (MSFT - Free Report) margins continued to benefit from strong cloud growth and operating leverage in the fourth quarter of fiscal 2026. Gross margin reached $60.5 billion, up about 15% year over year, while operating income increased 18% to $40.6 billion, supported by revenue growth and disciplined expense management. Intelligent Cloud operating income rose roughly 31% to $16 billion, with the segment’s revenue increasing 32%. However, elevated AI and cloud infrastructure investments remain a margin consideration, with capital expenditures expected to exceed $50 billion in the fiscal first quarter and reach roughly $175 billion for fiscal 2027 under the updated accounting treatment.
Nebius Group N.V. (NBIS - Free Report) is entering 2027 with strong margin momentum, supported by rising revenue, the asset-light model, Token Factory and recent acquisitions. In the second quarter of 2026, Group adjusted EBITDA margin expanded to 41% from 32% in the first quarter, while the Nebius AI business delivered a 50% adjusted EBITDA margin. Management expects further margin expansion as its asset-light model and high-value agentic and inference services contribute a larger share of revenue. Capacity from Nebius’ own data centers is also expected to improve margins in the second half of 2027. For 2026, the company targets an adjusted EBITDA margin of approximately 40%.
CRWV’s Price Performance and Estimates
Shares of CoreWeave have gained 15.9% year to date against the Internet Software industry’s growth of 3.1%.
Image Source: Zacks Investment Research
On a price-to-book basis, CRWV’s shares trade at 7.39X, higher than the Internet Software industry’s 5.08X.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for CRWV’s current-year earnings has been revised downward over the past 60 days.
View the Zacks #1 Rank List
Image: Bigstock
Will CoreWeave's Margins Continue Expanding Through 2026?
Key Takeaways
CoreWeave, Inc. (CRWV - Free Report) appears well-positioned for continued margin expansion through the remainder of 2026, as increasing scale, stronger contract economics and higher-margin offerings begin to translate into greater operating leverage. In the second quarter, the company’s adjusted operating margin expanded to 5% from 1% in the prior quarter, while adjusted operating income increased to $128 million from $21 million. Management said the improvement came as operating leverage began to take effect, despite the company continuing to incur significant ramp costs.
The company expects this improvement to continue sequentially in the second half of the year. CoreWeave guided third-quarter adjusted operating income of $200 million to $260 million and expects margins to continue expanding, reaching the low teens in the fourth quarter. For full-year 2026, the company raised its adjusted operating income guidance to $960 million-$1.15 billion, and revenue guidance to $12.4 billion-$13.2 billion. The company also raised its expected year-end annualized run-rate revenue to $18.5 billion-$19.5 billion.
Recent customer contracts are also supporting the margin outlook. CoreWeave stated that contracts signed in the second quarter carried contribution margins 5 to 10 percentage points higher than those added in recent quarters. Pricing and margins for Blackwell and Vera Rubin SKUs were setting new highs, while prior-generation SKUs continued to command strong pricing. Management also highlighted the growth of margin-accretive businesses such as storage, CPU, networking and software, which exceeded $400 million in ARR in the second quarter.
Scale is another key factor supporting the expansion. As CoreWeave’s installed base grows, each new deployment becomes a smaller portion of the overall base while contracted revenue from existing deployments remains in place. On the last earnings call, management stated this is helping transform scale into operating leverage and is why margins expanded in the second quarter. The company expects this trend to continue in the third quarter and the fourth quarter.
CoreWeave is also seeing margin expansion from its newer Vera Rubin platform from the outset, with management stating that a significant portion of the recent 5-10% margin improvement is coming from the Vera Rubin SKU.
Taking a Look at CRWV’s Competitors
Microsoft’s (MSFT - Free Report) margins continued to benefit from strong cloud growth and operating leverage in the fourth quarter of fiscal 2026. Gross margin reached $60.5 billion, up about 15% year over year, while operating income increased 18% to $40.6 billion, supported by revenue growth and disciplined expense management. Intelligent Cloud operating income rose roughly 31% to $16 billion, with the segment’s revenue increasing 32%. However, elevated AI and cloud infrastructure investments remain a margin consideration, with capital expenditures expected to exceed $50 billion in the fiscal first quarter and reach roughly $175 billion for fiscal 2027 under the updated accounting treatment.
Nebius Group N.V. (NBIS - Free Report) is entering 2027 with strong margin momentum, supported by rising revenue, the asset-light model, Token Factory and recent acquisitions. In the second quarter of 2026, Group adjusted EBITDA margin expanded to 41% from 32% in the first quarter, while the Nebius AI business delivered a 50% adjusted EBITDA margin. Management expects further margin expansion as its asset-light model and high-value agentic and inference services contribute a larger share of revenue. Capacity from Nebius’ own data centers is also expected to improve margins in the second half of 2027. For 2026, the company targets an adjusted EBITDA margin of approximately 40%.
CRWV’s Price Performance and Estimates
Shares of CoreWeave have gained 15.9% year to date against the Internet Software industry’s growth of 3.1%.
Image Source: Zacks Investment Research
On a price-to-book basis, CRWV’s shares trade at 7.39X, higher than the Internet Software industry’s 5.08X.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for CRWV’s current-year earnings has been revised downward over the past 60 days.
Image Source: Zacks Investment Research
CRWV currently carries a Zacks Rank #3 (Hold).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.