BofA analyst Brad Sills downgraded CoreWeave to ‘Neutral’ from ‘Buy’ but raised the price target to $185 from $76.

Shares of AI infrastructure provider CoreWeave Inc. (CRWV) surged 5% on Monday, defying a Bank of America downgrade on valuation concerns.

CoreWeave’s initial public offering (IPO) was the largest technology IPO since 2021. The stock has nearly quadrupled since its listing in March this year from the IPO price of $40.

BofA analyst Brad Sills downgraded CoreWeave to ‘Neutral’ from ‘Buy’ but raised the price target to $185 from $76. The new price target still implies an 18% upside from the stock’s current price of approximately $156.

According to TheFly, BofA noted that the stock has run up 145% following the company’s first-quarter (Q1) earnings.

“We acknowledge there are positive developments including: (1) a new hyperscaler customer; (2) expansion on OpenAI agreement; and (3) debt raise at lower cost of capital,” Sills wrote in a note to clients, according to a CNBC report.

“However, with stock trading at 25x CY27e EBIT, a premium to the peer group at 16x, we believe much of the upside is priced in,” Sills noted.

Although the firm’s spending on artificial intelligence could be hitting its peak, the BofA analyst noted that he still sees “solid sustained demand in CoreWeave’s AI infrastructure market.”

CoreWeave has been in the news recently after the company sold its entire stake in Applied Digital (APLD), according to a filing.

Earlier, Applied Digital had finalized two long-term leases with CoreWeave. These agreements, each spanning roughly 15 years, aimed to enable Applied Digital to deliver 250 megawatts (MW) of critical IT power to support CoreWeave’s AI and HPC systems at its data center complex in Ellendale, North Dakota.

The company had expected to generate around $7 billion in revenue over the lifetime of the leases.

CoreWeave stock has gained over 289% since its listing in March this year.

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