The Nvidia-backed business announced on Wednesday that it plans to invest $20 billion to $23 billion this year in data center capacity and AI technology in order to meet the rapidly increasing demand from customers, including Microsoft.

Its shares, which had risen as much as 11% on better-than-expected sales in its maiden reports as a public company after making its debut on the Nasdaq in March, plummeted 5% as a result of the heavy-spending plan.

In an interview with Reuters, CoreWeave CEO Mike Intrator stated that the market would need some time to comprehend the company’s distinctive debt and capital expenditure structure or the second quarter, the company’s estimated capital expenditure of $3 billion to $3.5 billion was significantly higher than its revenue projection of $1.06 billion to $1.1 billion.

As companies compete to create increasingly complex generative AI systems, the need for data centers and powerful computers has increased. Iterator stated that CoreWeave was trying to diversify its supply networks in order to lessen the impact of tariffs after trade tensions between the United States and China.

CoreWeave’s primary business is extremely capital-intensive and necessitates significant upfront expenditures in cutting-edge processors and systems despite its dominant market position. As of March 31, the business had a $25.9 billion revenue backlog, of which $11.2 billion came from its five-year agreement with OpenAI.

Under the terms of the March agreement, CoreWeave will supply OpenAI with AI infrastructure in exchange for a stake in the company that created ChatGPT.

In Wednesday’s after-hours trading, the company’s stock had already surged up to 11% following the release of its maiden earnings report as a publicly traded company. Revenue during the first quarter exceeded analyst projections, and the results showed a positive picture for the year.

According to Bloomberg estimates, CoreWeave recorded sales of $981.6 million for the three months ended March 31—more than the $862.3 million that Wall Street experts had predicted.

In contrast to Wall Street analysts’ estimates of $1.04 billion for the second quarter and $4.6 billion for the year, the business anticipates revenue of $1.06 billion to $1.1 billion for the second quarter and $4.9 billion to $5.1 billion for the entire year, according to Bloomberg statistics.