TL;DR

CoreWeave’s stock price plummeted after OpenAI chose Google Cloud, illustrating the dangers of investing in hyped-up tech companies with weak fundamentals. It’s a modern-day cautionary tale of how quickly fortunes can be lost in a rapidly changing market.

Story

Another day, another tech dream imploding. Remember the dot-com bust? 2008? This feels eerily similar. CoreWeave (CRWV), the darling of the AI cloud-computing space, is facing a reckoning. Their whole business model was built on the premise that OpenAI, a massive AI player, would always need their GPUs. ‣ GPUs: Graphics Processing Units—supercharged computers for AI. Think of it like a tiny island nation’s economy completely dependent on one rich tourist. What happens when that tourist finds a cheaper, better resort?

OpenAI’s recent deal with Google Cloud is that cheaper resort. Suddenly, CoreWeave’s promised “moat”—their supposed unique advantage—is nothing more than a shallow puddle. It’s a classic case of overvalued hype. Investors piled in, assuming OpenAI would be locked in for life, ignoring the simple fact that big tech companies play a brutal game of musical chairs. Google, a competitor, just snagged a huge win against them.

The human impact? Casual investors—many likely betting their retirement funds—face significant losses. They were lured by promises of explosive growth in a sector they didn’t truly understand. Like lemmings following the Pied Piper, they rushed in. The bigger players, meanwhile, will likely walk away largely unscathed. It’s the same old story: the small fish get eaten.

The lessons here are brutal and timeless:

• Don’t chase hype: If something sounds too good to be true, it almost certainly is.
• Understand the fundamentals: Don’t invest in something you don’t understand. AI and cloud computing is complex. Did you really understand CRWV’s business model?
• Diversify: Never put all your eggs in one basket, especially in the volatile tech sector. This wasn’t just about CRWV, it was about blind faith.

In the end, the CRWV story is a cautionary tale. It’s a reminder that even in the dazzling world of AI, greed, hype, and a lack of due diligence can lead to devastating consequences. It’s the same old story—just a new, faster, flashier, digital version.

Advice

Never invest based on hype alone. Always understand the company’s business model and diversify your portfolio.

Source

https://www.reddit.com/r/wallstreetbets/comments/1l82phm/crwv_losing_openai/