HSBC kept its $39 price target for CoreWeave, citing concerns about its debt and slowing demand for AI computing.

  • HSBC maintained its ‘Reduce’ rating and $39 price target for CoreWeave, implying 36.5% downside.
  • The firm warned that CoreWeave may struggle to match larger cloud providers’ returns.
  • HSBC also said that slower AI demand and borrowing costs nearing 15% could hurt growth. 

CoreWeave Inc. (CRWV) stock fell in Tuesday’s premarket trading after HSBC warned that rising debt costs and slowing AI demand could weigh on growth, pointing to a 36.5% downside potential from the stock’s last close despite a strong customer pipeline. 

CoreWeave stock traded over 2% lower in Tuesday’s premarket. Last week was the stock’s worst since November, as it plunged over 25% amid credit-market fears and growing macroeconomic concerns over high-yield debt refinancing.

HSBC Sees More Room For CoreWeave’s Share Fall

According to an X post by Brian Sozzi, Executive Editor of Yahoo Finance, HSBC Global Investment Research reiterated its bearish view on CoreWeave, warning that its business model may struggle to deliver returns compared with larger cloud computing companies.

In a research note on Monday, HSBC maintained its ‘Reduce’ rating on the AI cloud provider and kept its price target at $39. The target implied a 36.5% downside from the stock's last closing price. The bank also retained its earnings estimates, which remain well below Wall Street expectations.

CoreWeave’s Business Model Raises Questions

CoreWeave supplies computing capacity for AI workloads and counts major technology companies, including Microsoft Corp. (MSFT) and OpenAI, among its customers. Its reported $104 billion revenue backlog and ties to Nvidia Corp. (NVDA) give high hopes. However, HSBC questioned whether the company can generate sufficient returns from its expensive infrastructure investments.

HSBC estimates that CoreWeave could bring in about $12 million in annual revenue for every megawatt of capacity in 2027. That compares with an estimated $17 million to $18 million for larger cloud providers. The firm attributes the difference partly to the broad services and more diversified customer bases that established hyperscalers have.

AI Demand And Financing Add Pressure For CoreWeave 

According to HSBC, CoreWeave secured several high-paying short-term contracts between May and September 2026. These included agreements signed in September that could generate roughly $40 million in annual revenue per megawatt, alongside deals involving SpaceX, Anthropic and Google.

However, the firm cautioned that slower growth among large language model (LLM) providers could weaken demand for short-term computing capacity. Rising borrowing costs could also make it harder for CoreWeave to finance additional infrastructure, especially if customers become less willing to commit to capacity before it is needed.

Bond yields near 15% have heightened market concerns about the company's financing risks. HSBC's longer-term non-GAAP earnings-per-share estimates for 2028 through 2030 are 50% to 70% below consensus forecasts. HSBC expects CoreWeave to achieve operating margins of 15% to 16% over the long term, compared with management's guidance of about 25%.

CRWV Stock: Retail View 

However, on Stocktwits, retail sentiment around the stock remained ‘extremely bullish’. 

CRWV stock has declined 14% year-to-date. 

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