CoreWeave Analyst Stays On Sidelines As Risk-Averse Market Takes Sheen Off Massive Potential, But Retail Is Optimistic

Morgan Stanley analyst said CoreWeave’s strong domain expertise in building and operating GPU clusters has helped it build more than $25 billion book of business in less than five years.

Data center operator CoreWeave, Inc. (CRWV), which went public last month, was initiated by Morgan Stanley on Tuesday with an ‘Equal-Weight’ rating.

Analyst Keith Weiss set a $46 price target for CoreWeave stock, implying roughly 20% upside potential.

While largely convinced about CoreWeave’s market opportunity, the analyst was guarded on the stock due to the risk-averse market backdrop.

Weiss noted that CoreWeave’s integrated artificial intelligence (AI) cloud platform delivers composable, fungible and performant AI infrastructure addressing more than $360 billion in demand for specialized compute.

The analyst said CoreWeave’s strong domain expertise in building and operating GPU clusters has helped it build more than $25 billion book of business in less than five years. He added that this scaling is formerly unheard of in software.

The analyst said the company’s differentiated capabilities have positioned it to compete for businesses from hyperscalers, sovereigns, and enterprises pursuing generative AI (GenAI) opportunities.

On the other hand, Weiss said CoreWeave presents material risks as well, including its huge debt load, significant customer concentration, and increasing competition.

He added that these risks and volatile macro and, by extension, stock market swings could limit investors’ willingness to expand CoreWeave’s valuation, thereby limiting near-term upside.

The Fly reported that CoreWeave stock received ‘Buy’-equivalent ratings from JPMorgan, Stifel, Mizuho, Jefferies, BofA, Barclays, and Needham. 

Apart from Morgan Stanley, Goldman Sachs, Citi, Wells Fargo, and Deutsche Bank initiated the stock with ‘Neutral’-equivalent ratings.

The price targets for CoreWeave stock ranged from $40 to $55.

On Stocktwits, retail was largely ‘bullish’ on CoreWeave stock.

A bullish watcher said the stock is “super undervalued.”

Another user remained hopeful that CoreWeave would be in for strong gains when the market finds its footing.

CoreWeave stock ended Tuesday’s session up 8.74% at $38.51 and rose 4.78% in the after-hours session.

Since its March 28 listing, the stock has moved in a $33.51-$64.62 range. It is down 3.7% from its closing price in the debut session.

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