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

CoreWeave IPO Was 'Fantastic Entry Point,' But Stock Now 'A Little Overheated' - CoreWeave (NASDAQ:CRWV)

Another analyst is staying on the sidelines of CoreWeave Inc CRWV after the rally in shares since the March IPO. The CoreWeave Analyst: H.C. Wainwright analyst Kevin Dede initiates coverage on CoreWeave with a Neutral rating with no price target. Read Also: CoreWeave's 290% Rally Raises Valuation Fears, Analyst Says 'Upside Has Been Priced In' The Analyst Takeaways: CoreWeave is taking the AI sector by storm with both speed and excellence, Dede said in a new investor note. "A tangled web, carefully woven, delivers compute efficiency and speed to market," Dede said. The analyst said the company is helping to improve and support high-performance compute for AI applications. Dede said part of the bullish sentiment for CoreWeave stock and its surging price comes from its proven model and its customer list. More bullish sentiment for the stock could come from further growth in the AI sector. Microsoft Corporation MSFT is named in the report as a key customer, making up 64% of CoreWeave's revenue in the last fiscal year. Other customers include Meta Platforms, Google, and OpenAI. Dede also predicts that some three-letter government agencies could be unnamed CoreWeave customers. Dede calls CoreWeave's customer list "both flashy and well-recognized," as it includes leading hyperscalers and large names in high-performance compute and AI. "We see the company as an ultimate benefactor in the surge of artificial intelligence use." While Dede is bullish on the outlook for the AI sector and CoreWeave's model, the sharp run-up in the share price has the analyst on the sidelines. "Despite the positive arguments, we initiate coverage with a Neutral rating as the stock may need a minute to breathe after a five-fold breakout versus a period-comp 25% Nasdaq rise." The analyst said the IPO priced at $40 offered a "fantastic entry point" and shares are now "perhaps a little overheated." Another concern for the analyst is potential dilution with more capital needed to support growth. "We are not here saying it is impossible, but caution against unknown, unforeseen headline risks." CRWV Price Action: CoreWeave stock trades at $167.09 on Wednesday versus a 52-week trading range of $33.52 to $187.00. Shares opened at around $39 and closed at around $40 on their first day of trading before rallying days later. Read Next: EXCLUSIVE: May's 20 Most-Searched Tickers On Benzinga Pro -- Where Do Apple, Palantir, CoreWeave, Nvidia Rank? Photo: PJ McDonnell/Shutterstock CRWVCoreWeave Inc$166.59-3.49%Stock Score Locked: Want to See it? Benzinga Rankings give you vital metrics on any stock - anytime. Reveal Full ScoreEdge RankingsMomentumNot AvailableGrowthNot AvailableQualityNot AvailableValue8.93Price TrendShortMediumLongOverviewMSFTMicrosoft Corp$493.150.62%Market News and Data brought to you by Benzinga APIs

CoreWeave Stock Is Moving Lower Wednesday: What's Going On? - CoreWeave (NASDAQ:CRWV)

CoreWeave, Inc. CRWV shares are trading lower on Wednesday. HC Wainwright & Co. initiated coverage on the stock with a Neutral rating. What To Know: Despite several positive points, HC Wainwright & Co. analyst Kevin Dede said on Wednesday that the stock may need a "minute to breathe" after soaring fivefold, compared to a 25% gain in the Nasdaq over the same period. Some of the analyst's bullish points include CoreWeave's early deployment of Nvidia's GB200 chips, giving it a first-mover edge in AI infrastructure. The company has also secured long-term contracts with major customers like OpenAI, Microsoft and Meta, offering strong revenue visibility. The analyst added that CoreWeave is positioned to benefit from a fast-growing AI and software market, which could boost performance and help retain customers. On the other hand, Dede flagged several risks, including CoreWeave's heavy capital needs. Furthermore, the company has outlined a $20 to $23 billion capex plan this year, which may require taking on more debt or selling additional stock. Additionally, the analyst pointed to execution risks tied to CoreWeave's data center partners, noting that delays or supply chain issues could make it harder for the company to meet customer obligations. See Also: The Metals Company (TMC) Stock Is Climbing Wednesday: What's Going On? CRWV Price Action: At the time of publication, CoreWeave stock was down 6.57% at $161.32, according to data from Benzinga Pro. Image via Shutterstock. CRWVCoreWeave Inc$161.54-6.42%Stock Score Locked: Want to See it? Benzinga Rankings give you vital metrics on any stock - anytime. Reveal Full ScoreEdge RankingsMomentumNot AvailableGrowthNot AvailableQualityNot AvailableValue8.93Price TrendShortMediumLongOverviewMarket News and Data brought to you by Benzinga APIs

Why CoreWeave Stock Plummeted This Week | The Motley Fool

Despite strong gains for the broader market, CoreWeave (CRWV 1.22%) stock closed out this week's trading down by double digits. The artificial intelligence (AI) specialist's share price fell 12.8% over the stretch. Meanwhile, the S&P 500 index rose 3.4%. CoreWeave stock lost ground this week following fresh analyst coverage and news that Nvidia (NVDA 1.74%) is making a bigger push in the cloud computing space. The company's valuation was also pressured by reports that a big acquisition move could be in the works. Before the market opened on Wednesday, H.C. Wainwright published its first rating on CoreWeave. The investment firm set a neutral rating on the tech specialist's stock, with analyst Kevin Dede raising some valuation concerns despite also acknowledging that CoreWeave had demonstrated its computing strengths. The Wall Street Journal also published a report on Wednesday stating that Nvidia plans to ramp up its own cloud-computing business. Nvidia's advanced graphics processing units (GPUs) have been the key hardware at the center of the AI data center revolution, but the tech leader is also in the relatively early stages of building its own AI-as-a-service (AIaaS) business. The company is a financial backer of CoreWeave, but some investors are worried that the tech giant could move in on the smaller player's turf. On Thursday, WSJ reported that CoreWeave is negotiating a deal to acquire Core Scientific (CORZ 1.53%). According to the report, a buyout could be finalized within weeks and is expected to assign a Core Scientific substantial valuation premium. Based on subsequent trading for CoreWeave, the reaction from investors appears to be mixed. Analysts are also split on what the buyout valuation might look like. Jeffries put forward a lower-end target, estimating that CoreWeave could pay between $16 per share and $23 per share to purchase Core Scientific. Cantor Fitzgerald put the potential buyout price at above $30 per share, and Roth Capital expects the company could pay as much as $38 per share in an all-stock deal. Given that CoreWeave tried to acquire Core Scientific at a price of $5.75 per share last year, some investors may be worried that the company is at risk of overpaying in the potential buyout.

CoreWeave started at Neutral on stretched valuation after five-fold rally By Investing.com

Investing.com -- H.C. Wainwright began coverage of CoreWeave Inc with a Neutral rating saying the cloud-computing firm's shares have outrun fundamentals after quintupling since their March initial public offering. The brokerage said CoreWeave's focus on high-performance, graphics-chip-based infrastructure for artificial-intelligence workloads puts it at the centre of a fast-growing market. The New Jersey-based company runs more than 250,000 GPUs across 33 data centres and was first to deploy Nvidia's new GB200 systems, giving it a technological edge, analyst wrote. But the stock's jump to about $173 from a $40 IPO price has lifted CoreWeave's market value to roughly $83 billion, a level Wainwright called "stretched" given heavy spending plans and looming financing needs. The firm noted CoreWeave expects to invest $20 billion to $23 billion this year to meet customer obligations and already carries about $10.7 billion of debt against $2.5 billion in cash. "Splitting the gap between debt and equity suggests a 55-plus million share issuance," analyst at HCW said, warning that potential dilution and headline risks could weigh on the stock in the near term. Analyst added that even with strong demand from customers such as Microsoft (NASDAQ:MSFT) and OpenAI, "investors may want to give the shares time to digest the recent move." CoreWeave's long-term, take-or-pay contracts provide revenue visibility, the report said, but the company faces execution risks as competition among cloud providers intensifies. Wainwright sees the AI-enhanced high-performance computing market growing 7-10 per cent annually to about $87 billion by 2034, yet says CoreWeave must raise substantial capital to capture that opportunity.