CoreWeave Inc (NASDAQ ticker CRWV), an artificial intelligence company, saw its stock price soar approximately 340% after its IPO, but then began to decline continuously. Last Tuesday, the stock price rebounded by over 8%, currently reaching $170. Wall Street analysts have differing opinions on the stock's future performance. Bank analyst Brad Sills downgraded the company's stock rating to hold but set a new high target price, far exceeding estimates from other Wall Street analysts. Sills is bullish on future performance, while other analysts express skepticism, leading to mixed opinions.
CoreWeave is one of the largest holders of NVIDIA (NVDA) graphics processors. CoreWeave rents out data center capacity to major tech companies like Microsoft (MSFT) and Meta (META) since these companies do not have enough GPU inventory to support their AI businesses. CoreWeave uses its inventory of NVIDIA GPUs as collateral to borrow at high interest rates to purchase more NVIDIA chips. NVIDIA is also a major investor and customer of this AI cloud company. Since its IPO in March, CoreWeave's market capitalization has increased by over $64 billion, reaching $82.7 billion by Tuesday afternoon, making it a phenomenal stock. There is significant attention on the company's future performance. The following is an analysis report, purely for market observation and not an investment recommendation.
CoreWeave's stock declined immediately after its IPO
Bank analyst Brad Sills downgraded CoreWeave's stock rating from buy to hold on Monday, citing that he believes CoreWeave is overvalued. He noted that CoreWeave currently has a price-to-earnings ratio of 27 times (based on expected earnings for 2027) and emphasized its heavy debt load. In a report to clients, Brad Sills wrote that historically, 85% of CoreWeave's capital expenditures have come from debt, estimating that expenditures will reach $23 billion in 2025, a figure that surprised Wall Street analysts and led to an immediate drop in stock price after its public listing. Despite downgrading the stock rating, Brad Sills raised the target price to $185, the highest among Wall Street analysts tracked by Bloomberg.
Brad Sills listed CoreWeave's spending on artificial intelligence and stated that this spending remains very healthy, with growth rates reaching a peak. He believes that the market demand for CoreWeave's artificial intelligence infrastructure continues to be strong. He indicated that by 2027, artificial intelligence capital expenditures are expected to grow by 4%, reaching $20.6 billion, but this increase is far lower than the 65% increase in artificial intelligence capital expenditures expected for 2025. Brad Sills also mentioned the expanded deal between CoreWeave and OpenAI (OPAI.PVT). CoreWeave signed a $4 billion deal with the ChatGPT maker in May.
Wall Street analysts have mixed opinions and are skeptical
Jefferies analyst Brent Thill also praised CoreWeave in a report to clients on Monday, listing the stock as one of the most promising AI stocks and reiterating its target price of $180. Thill stated that CRWV is the fastest-growing AI provider within the company's research coverage, believing their infrastructure is more durable than most people imagine.
DA Davidson analyst Gil Luria stated in an interview with Yahoo Finance that even in an optimistic scenario, all cash flow from CoreWeave's contracts is used to pay down debt, with no money flowing to shareholders. Luria pointed out that there are still some concerns about CoreWeave's massive deal with OpenAI; while OpenAI is an excellent company, it is also facing significant losses and must secure more financing to meet its commitments to CoreWeave.
This article discusses how CoreWeave's stock surged 340% after its IPO and subsequently fell, with Wall Street analysts having differing views on its future performance. First appeared in Chain News ABMedia.