Investors – and Elon Musk – have sent CoreWeave stock tumbling. But many analysts don’t see the problem.
It’s been a rough few days for CoreWeave (CRWV) investors. Shares of the neocloud provider fell 15% on Wednesday and about 25% over the past week and a half.
The sale was apparently fueled by a widely circulated graphic which illustrated rising borrowing costswhich was amplified by Elon Musk on X with a damning one-word response: “yeah.”
The reaction was so intense that CEO Mike Intrator sent an internal memo to staff saying the market was acting “irrationally.”
The Fed’s metaphorical AI funding chair, Nvidia (NVDA) CEO Jensen Huang, also came to CoreWeave’s defense, emphasizing his own entangled interests with a partner company and the urgency within the industry to maintain optimistic sentiment about AI development.
64.29 -5:40 a.m. (-7.75%)
At 11:03:51 a.m. EDT. Open market.
But even as many investors flee, several top Wall Street analysts see no red flags — and agree with Intrator. Bank of America analysts – who, remember, are held to a high level of objectivity – on Thursday reiterated their buy rating and a price target of $140, more than double the current share price.
Analyst Tal Liani wrote in a note Thursday that CoreWeave’s track record provides confidence. “We believe CoreWeave’s greatest competitive advantage is its ability to bring active power online at scale,” he said, adding that the company’s risks are controlled in several ways.
Rather than building data centers, CoreWeave primarily leases data center capacity “from a diverse set of third-party developers,” Liani wrote. The company simultaneously signs both sides of its infrastructure provider and customer agreements and uses upfront liquidity and reputation from blue-chip customers to reduce borrowing risk.
The contract structure also allows for predictable financing and a clearer view of its bookings, Liani wrote. While other neocloud companies use short-term contracts for higher prices, CoreWeave primarily sells capacity through five-year contracts to large hyperscalers and AI labs. This ensures a lower cost of capital, Liani said, and provides a high degree of revenue visibility.
Analysts at Deutsche Bank also cling to an optimistic view of CoreWeave, expressing confusion and surprise at the investor panic. Brad Zelnick wrote in a note Thursday that the selloff presents a buying opportunity.
“We struggle to find company-specific factors that justify this recent move, and the fundamental market backdrop for AI infrastructure remains quite favorable based on the signals we are seeing,” he said.
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