CoreWeave, the Nvidia-backed cloud computing company specialising in artificial intelligence infrastructure, received broadly positive analyst coverage this week despite having struggled to gain investor traction after its initial public offering (IPO).
On Tuesday, the mandatory post-IPO quiet period for brokerages expired, allowing Wall Street analysts to begin issuing formal coverage of the stock.
Five major firms, including Goldman Sachs, Morgan Stanley, and JP Morgan, started coverage, largely leaning bullish on the company’s prospects.
The company, based in Livingston, New Jersey, offers cloud services powered by cutting-edge Nvidia GPUs and operates 32 data centers that house more than 250,000 chips.
These capabilities have made CoreWeave a key player in the booming generative AI space, a point widely highlighted by analysts.
Yet, investor interest remained muted.
CRWV stock trajectory and analyst optimism
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Shares of CoreWeave have fallen for five consecutive sessions, closing at $35.25 on Monday, down 12.4% for the day and below its IPO price of $40.
The stock was seen rising by over 2% during pre-market trading hours on Tuesday, at $35.42.
Goldman Sachs set the most optimistic price target at $54, while JP Morgan was the most conservative at $43.
“CoreWeave exhibits a track record of being first to deploy next-gen GPUs, making it difficult for other hyperscalers to claim industry leadership,” JP Morgan noted.
Goldman Sachs, while neutral in its rating, cited the firm’s uniqueness and lack of direct public peers as justification for its $54 target.
Customer concentration and macro headwinds raise red flags
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Despite the enthusiasm, analysts also flagged significant concerns.
Chief among them is CoreWeave’s dependence on a small number of clients.
In 2023, nearly 77% of its revenue came from just two customers, one of which is believed to be Microsoft.
Barclays cautioned that the company’s strong ties with Microsoft and OpenAI—cemented by a recent $11.9 billion, five-year deal—could be both a strength and a vulnerability.
“Close relationship with Microsoft and OpenAI could cut both ways … and the customer concentration here does pose a risk,” Barclays said.
Morgan Stanley, which rated the stock “equal-weight,” added that ongoing economic uncertainty and weakness in equity markets could keep investor appetite in check.
“Volatile macro (and equities) backdrop may limit investors’ willingness,” the firm noted.
JP Morgan also warned that the capital-intensive nature of CoreWeave’s operations, driven by debt, may not appeal to risk-averse investors, calling the company “a wild, lumpy, volatile ride.”
IPO falls short of initial targets amid cooling investor sentiment
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CoreWeave’s IPO, initially expected to be a blockbuster, fell short of expectations.
The company had aimed to price shares between $47 and $55, potentially raising up to $2.5 billion.
However, tepid demand forced it to scale back the offering to 37.5 million shares, down from the originally planned 49 million.
“There’s a lot of headwinds in the macro,” CEO Michael Intrator admitted in an interview on CNBC last month. “And we definitely had to scale or rightsize the transaction for where the buying interest was.”
The listing was seen as a litmus test for investor appetite in AI-related stocks amid heightened volatility.
While hopes for a more favourable regulatory environment under a possible Trump re-election had buoyed sentiment early on, rising tariff concerns and macroeconomic uncertainty have weighed heavily since.
