CoreWeave's Meteoric Rise in AI Cloud Computing Raises Valuation Concerns

Bank of America downgrades hot IPO and Nvidia derivative CoreWeave, citing valuation

After a strong run, CoreWeave stock may have limited room for further upside, according to Bank of America. The firm downgraded CoreWeave to neutral from buy on Monday, but increased its price target to $185 per share from $76, which suggests shares could rise 26% from Friday's $147.19 close. "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," analyst Brad Sills wrote in a note to clients. "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." CoreWeave went public in late March. CoreWeave's $1.5 billion IPO raise marked the largest tech offering on Wall Street since 2021. CRWD YTD mountain CoreWeave stock since its March initial public offering. And while Sills said CoreWeave's spending on artificial intelligence could be reaching its peak, he added that he still sees "solid sustained demand in CoreWeave's AI infrastructure market." Shares of the AI cloud-computing firm have surged more than 37% so far in June and were about 4% higher on Monday.

CoreWeave's 290% Rally Raises Valuation Fears, Analyst Says 'Upside Has Been Priced In' - CoreWeave (NASDAQ:CRWV)

An analyst downgraded AI cloud-computing company CoreWeave Inc. CRWV on Monday based on valuation concerns after its shares soared following its March IPO. The CoreWeave Analyst: Bank of America analyst Brad Sills downgraded CoreWeave from Buy to Neutral and raised the price target from $76 to $185. Read Also: Will Rising Stars Circle, CoreWeave Perform Like Past IPO Winners Reddit, Astera Labs? The Analyst Takeaways: CoreWeave stock was downgraded due to overvaluation concerns, and Sills's new investor note already prices the upside into shares. The analyst said CoreWeave stock is up 145% since first-quarter financial results. "We believe much of the near-term upside has been priced in and downgrade our rating to Neutral," Sills said. The analyst said CoreWeave trades at a premium of 25x for its enterprise value divided by EBIT. Sills is also concerned the company will need "significant debt funding" to help with its capex buildout and revenue upside. Sills sees CoreWeave's competition with Microsoft Corporation MSFT, Alphabet Inc GOOGGOOGL, and Amazon.com Inc AMZN as costly, as those companies have "much bigger scale" and can more easily spend on their capex. While Sills highlighted the company's high valuation and less upside with the recent share run-up, the analyst had several positive things to say about the stock, alongside the increasing price target. The note highlights the stock's positives, including new hyperscaler customers, expansion with OpenAI, and a recent debt raise at a lower rate. "In Q1, CoreWeave signed a $4 billion expansion deal with OpenAI, only two months after the initial deal was announced in March, bringing the total contract value to $15.9 billion." Sills aid AI capex growth rates are peaking, but still very healthy. "Capital expenditures for AI infrastructure are forecasted to reach $206 billion in CY27, growing 4% y/y, down from 65% in CY25." The analyst said new customer additions could help reduce customer concentration risk. CRWV Price Action: CoreWeave stock is up 5.3% to $155.11 on Monday versus a trading range of $33.52 to $166.60 since going public. Shares are up 290% since the IPO. Read Next: EXCLUSIVE: May's 20 Most-Searched Tickers On Benzinga Pro -- Where Do Apple, Palantir, CoreWeave, Nvidia Rank? Photo: Shutterstock CRWVCoreWeave Inc$155.125.38%Stock Score Locked: Want to See it? Benzinga Rankings give you vital metrics on any stock - anytime. Reveal Full ScoreEdge RankingsMomentumNot AvailableGrowthNot AvailableQualityNot AvailableValue9.75Price TrendShortMediumLongOverviewAMZNAmazon.com Inc$215.341.53%GOOGAlphabet Inc$176.600.41%GOOGLAlphabet Inc$175.220.31%MSFTMicrosoft Corp$480.051.07%Market News and Data brought to you by Benzinga APIs

CoreWeave Stock Hits New All-Time High Today: What's Going On? - CoreWeave (NASDAQ:CRWV)

Shares of AI cloud-computing provider CoreWeave Inc CRWV surged to a new all-time high on Tuesday, reaching $175.38 during the session despite a lack of company-specific news. The stock's recent, powerful ascent continues a trend of marked growth since its March IPO, fueled by intense investor excitement around artificial intelligence infrastructure. What To Know: Tuesday's new peak comes just a day after a notable analyst downgrade. On Monday, Bank of America's Brad Sills shifted his rating on CoreWeave from Buy to Neutral, citing significant valuation concerns after the stock soared over 145% since its first-quarter results. Read Also: Houston American Energy Stock Explodes 85% Amid Middle East Tensions While raising the price target substantially to $185, Sills suggested much of the near-term upside was already priced in. He also pointed to the costly competition from established tech giants. Despite the cautionary note, the market's bullish sentiment appears unshaken for now. Investors seem focused on the company's explosive fundamentals, including a reported 420% year-over-year first-quarter revenue increase and a massive $25.9 billion revenue backlog. Recent catalysts, such as its expanding $15.9 billion contract with OpenAI and its crucial role in a new Google-OpenAI deal, have solidified its position as a key player, closely allied with GPU-maker Nvidia Corp. CRWV Price Action: According to data from Benzinga Pro, CRWV is trading higher by 8.71% to $172.30 ahead of Tuesday's session close. CRWV's trading volume is 28.752 million shares, above its 100-day average volume of 21.995 million shares. CRWV has a 52-week high of $175.38 and a 52-week low of $33.52. Read Also: What's Going On With Digital Turbine Shares Today? How To Buy CRWV Stock Besides going to a brokerage platform to purchase a share -- or fractional share -- of stock, you can also gain access to shares either by buying an exchange traded fund (ETF) that holds the stock itself, or by allocating to a strategy in your 401(k) that would seek to acquire shares in a mutual fund or other instrument. For example, in CoreWeave's case, it is in the Information Technology sector. An ETF will likely hold shares in many liquid and large companies that help track that sector, allowing an investor to gain exposure to the trends within that segment. Image: Shutterstock CRWVCoreWeave Inc$171.258.04%Stock Score Locked: Edge Members Only Benzinga Rankings give you vital metrics on any stock - anytime. Unlock RankingsEdge RankingsMomentumNot AvailableGrowthNot AvailableQualityNot AvailableValue9.44Price TrendShortMediumLongOverviewMarket News and Data brought to you by Benzinga APIs

Could Buying AI Beneficiary CoreWeave Stock Set You Up for Life? | The Motley Fool

The company is growing rapidly, but it's struggling to generate positive cash flow. Artificial intelligence (AI) is changing the game for many sectors. Cloud computing is no exception. The outsourced data center and computing strategy that has steadily gained market share in the last two decades is now seeing accelerating growth because of AI, which requires an immense amount of compute to train and operate. One cloud company to watch in the AI space is CoreWeave (CRWV 8.45%). It is an AI-focused cloud provider that just went public in 2025, with revenue growing 420% year over year last quarter. Could buying this AI stock help set up your portfolio for life? CoreWeave began its operations as a cryptocurrency mining operation. However, in 2019, the company pivoted its operations to cloud computing using Nvidia graphic processing units (GPUs). This decision -- either through foresight or luck -- set up CoreWeave to take advantage of the growing computing demand from AI companies. Buying up tons of the latest Nvidia computer chips, CoreWeave has been able to offer a cloud computing service built specifically to focus on AI. As a start-up, this has allowed it to operate much more nimbly than the big players in the space, such as Amazon Web Services (AWS), leading to contract wins and spending flowing to CoreWeave. It currently has an order backlog of $25.9 billion. Revenue is growing rapidly. Sales grew 420% year over year last quarter to $980 million, making CoreWeave one of the fastest-growing companies in the world. With such a large backlog to work through, the company looks set to keep growing at a fast rate and eclipse $10 billion in annual revenue in the near future. It is exciting times for the company, which has led to optimism in its stock price. Just a few years ago, this start-up was not worth much at all. Now it has a market cap of $71 billion. Fast growth from CoreWeave has not come without a price. The company had a $27.4 million operating loss last quarter. This may not seem like much, but when you look at the company's interest expense on debt and capital expenditures, the picture is more extreme. In order to finance its data center build-out, CoreWeave has loaded up its balance sheet with $3.77 billion in current debt and close to $5 billion in long-term debt. This debt had $264 million in net interest expense last quarter, or 27% of the company's revenue, and will be a headwind for a long time as the company tries to scale. Free cash flow is aggressively negative, at a $1.35 billion burn rate just in the first quarter of 2025. That is an annual burn rate of over $5 billion a year. The company needs to scale up spending on its platform quickly to stem this cash burn. With only $2.5 billion in total cash and equivalents on the balance sheet, CoreWeave is going to have to raise money in the near future in order to finance its data center growth plans. CoreWeave fits the classic definition of a high-growth stock that just went through its initial public offering. Investors are rightfully excited about how fast it is growing, but the company is operating aggressively with huge cash burn that presents a risk to its viability if AI spending slows down or stops. What should temper your expectations and make you hesitant to buy this stock is the valuation. At a market cap of $71 billion, the company is trading at over 30 times its trailing-12-month revenue. Yes, if revenue keeps growing at 400% a year, this price-to-sales (P/S) ratio will come down quickly. This is not likely to occur forever, however, as the company is already generating billions in annual revenue. Plus, the company will not have sky-high margins because of all the interest expense it has to pay on its debt. It will likely need to raise more money shortly due to its heavy cash burn. To sum it up, there are a lot of ways for an investment in CoreWeave stock to go wrong. You need rapid growth to continue and a rapid transition to positive cash flow. If this does not happen, the stock will likely perform poorly for investors over the next few years, which is why you should not buy any shares today.

This AI Stock Is Up 268% This Year and Crushing Nvidia's Returns (Hint: It's Not Palantir) | The Motley Fool

Artificial intelligence (AI) investors love Nvidia. One stock has crushed its returns in the last few months: CoreWeave (CRWV 8.45%). The stock in the AI-focused cloud computing provider (and large Nvidia customer) is up 268% since its initial public offering (IPO) in late March, while Nvidia stock is flat year to date as of June 15. Investors are falling in love with the rapid growth at CoreWeave and its huge growth projections when it comes to AI and the cloud. Are you missing out by not owning CoreWeave stock to play the AI boom? CoreWeave stock has gone up and to the right since its initial public offering (IPO). This is common among popular IPO stocks, as they generally have a low publicly traded float -- meaning the amount of shares you can buy and sell each day -- before its lock-up period ends for insiders. A lock-up period is when insiders cannot sell shares after the IPO, and usually lasts three to six months. This led CoreWeave's stock to rise 268% in just a few months. Its revenue is growing like wildfire, up 420% year over year last quarter to $982 million. In 2025, the company expects to generate around $5 billion in revenue, which is up from basically zero in 2022. That means CoreWeave has gone from zero to $5 billion in revenue in less than five years, making it one of the fastest growing companies in market history. Why is CoreWeave growing so quickly? Because AI developers are flocking to its cloud platform to utilize its data centers for training and running AI systems. CoreWeave was built from the ground up for AI systems, which is why it now has a backlog of $25.9 billion. To be clear, it is not going to dethrone the other cloud providers, but it is increasingly nabbing share in the all-important AI growth category. Guidance calls for major growth in the future. In 2025 alone, CoreWeave is expecting to spend at least $20 billion on capital expenditures, or around 4 times its revenue estimates for the year. This means the company is laying out a huge amount of capital ahead of expected future demand as it hopes to capture more and more cloud spending related to AI. Being a global cloud provider is expensive. You have to spend billions of dollars ahead of time to build data centers, getting returns steadily in the future as your customers pay for computing capacity. All this aggressive spending will lead to huge cash burn. CoreWeave had negative free cash flow of $1.35 billion in the first quarter of 2025. This burn is expected to accelerate in the upcoming quarters given management's guidance for capital expenditures. For 2025, $5 billion in revenue vs. $20 billion in capital expenditures means at least a $15 billion free cash burn, and that is before considering any overhead costs. This will require a lot of capital raising, as the company has well under $5 billion in cash on the balance sheet. Management will likely need to take out more debt and sell more shares of its common stock in order to get the cash needed for these capital expenditures. It will not be cheap. Bulls may argue that CoreWeave is the future of cloud computing, one of the largest industries in the world that has brought riches to Amazon, Microsoft, and Alphabet shareholders. It has fast-growing revenue, a large backlog, and is one of the hottest stocks out there. However, at a market cap of $70 billion, I think CoreWeave stock is too richly valued for investors at the moment, and would lean to side with any bears who are hesitant to buy the stock today. The company has loaded up its balance sheet with debt, which has high interest expenses. More debt may be coming in order to finance its ambitious capital expenditure plans in 2025. Even if the company reaches its guidance for $5 billion in revenue this year, CoreWeave will be trading at a price-to-sales ratio (P/S) of 14.2, which is an aggressive valuation for any stock, let alone one with such a large free-cash-flow burn and debt levels. Stay away from CoreWeave; this a risky stock to add to your portfolio right now.

Analysts revamp forecast for Nvidia-backed AI stock

I have a virtual private server with several services running on it. It has replacements for Google Drive, Whatsapp, and Github (or Gitlab). Getting a sufficiently good internet connection that would allow me to use a real (on-premise) machine instead of a virtual one is very difficult where I live. I've been maintaining this server without any (serious) problems for a couple of years. However, in the past few months, the situation has changed, for the worse. Nothing brings me more joy than an occasional email from my VPS provider telling me that my server's CPU usage has been averaging at 98% for the last 2 hours. My server, which was almost invisible for a very long time, has become a target of scrapers and scanners. Related: Popular AI stock inks 5G network deal I am not alone in having this issue. Many prominent open-source projects had to protect themselves, too, and recently they started using "Anubis" for this. (Not the malware with the same name) Why the sudden change, you might ask? Well, an increasing number of companies think they will be the ones to create this 'incredible artificial intelligence.' So, they are scraping any website, regardless of whether its data is relevant and reliable. The more data they can collect, the better, seems to be the prevailing modus operandi. And once they're done collecting, throw everything into the blender and hope for the best. AI training "blender" as a service What if you are a little startup, with the aforementioned goals of writing incredible AI, and you've done the previous step of collecting the data, and now you just need that blender? Perhaps you have some investor money, but can't build that blender yourself. After all, Graphics cards used for AI training cost an arm and a leg. This is where CoreWeave (CRWV) comes in. Just like the VPS providers that enable people like me who can't use real machines for their servers to use their servers instead, CoreWeave enables companies that can't afford AI servers to do their AI training on its GPU mega clusters. More AI Stocks: Considering that the company's business model is "renting" Nvidia (NVDA) graphics cards, it is not surprising that the company has become Nvidia's largest holding, making up more than 78% of Nvidia's disclosed portfolio. Related: Micron makes massive $200 billion AI bet CoreWeave released its earnings report for Q1 2025 on May 14th. Here are the highlights: Guidance for the full year 2025 was: Bank of America analysts downgrade CoreWeave stock rating Bank of America analysts, Brad Sills and Carly Liu, shared their opinions on the CoreWeave stock. "In our view, the AI infrastructure [capital expenditures] growth rate is peaking, though still very healthy (estimates are likely to move higher on a larger base), led by OpenAI. OpenAI's ChatGPT is the single largest consumer of AI workloads and is growing at a rapid pace. Therefore, we see solid sustained demand in CoreWeave's AI infrastructure market," said analysts In Q1, CoreWeave expanded its deal with OpenAI bringing the total contract value to $15.9 billion. The company also signed a new hyperscaler customer in Q1. It has also increased the average contract duration to four and a half years from four years since 2024. Related: Apple WWDC underwhelms fans in a crucial upgrade Analysts forecasted $21 billion of negative free cash flow for the company through calendar year 2027, driven by high capital expenditures. CoreWeave funds the majority of its capital expenditures with debt. The company managed to lower the interest rate in the recent debt raise of $2 billion to 9.3%, from 11% in calendar year 2024. "However, this remains a small % of the total incremental debt required from here, raising some questions, in our view," continued analysts. Sills and Liu noted that the stock is trading at twenty-five times its calendar year 2027 EBIT estimate, which is a premium to the peer group that is trading at sixteen times the estimate. They set the new price objective for CoreWeave, raising their target from $76 to $185, which is 29 times their calendar year 2027 EBIT estimate (vs. 16x previously), or 0.4 times adjusted for 69% growth. That said, they cut their rating on the stock after CoreWeave's recent rally, arguing there's less room for shares to head higher. "We believe much of the near-term upside has been priced in and downgrade our rating to neutral from buy," concluded analysts. Related: Amazon's latest big bet may flop