Despite launching one of the most hyped tech IPOs in recent years, Nvidia (NVDA)-backed CoreWeave (CRWV) has yet to win over investors.
After five consecutive days of losses, shares of the AI infrastructure provider rebounded Tuesday, jumping 10.1% to $38.51, still below its IPO price of $40.
CoreWeave made a last-minute decision to lower the price target of its IPO to $40, after initially setting the target at $47 to $55.
That made it the largest U.S. IPO since 2021, but well short of the $2.7 billion it initially hoped to raise and a far cry from the $4 billion some expected.
Despite the IPO letdown, Wall Street remains largely optimistic about the company’s future. Eleven analysts initiated coverage this week: Seven rated the stock a buy, while the remaining four issued hold ratings.
“We believe that CoreWeave is well positioned to capture share of the $79 billion AI IaaS (infrastructure as a service) market given its rapid GPU deployment cycle,” wrote Bank of America analyst Brad Sills, who initiated with a buy rating.
Sills also highlighted CoreWeave’s “proprietary software optimized for AI workloads” and its strategic relationships with major AI-native players like Microsoft (MSFT), Meta Platforms (META), and OpenAI.
Customer concentration risk, but growth story intact
While analysts are bullish, some concerns remain, particularly around CoreWeave’s reliance on Microsoft, which accounts for 62% of its revenue.
That concentration is particularly concerning as Microsoft is reportedly pulling back on data center leases in both the U.S. and Europe. And CoreWeave’s core business model involves renting out Nvidia-powered servers for AI workloads.
Even so, Jefferies analyst Brent Thill also initiated with a buy rating, calling CoreWeave a key early mover.
“We believe we’re still in the very early innings of this build-out for AI,” Thill wrote.
“CoreWeave is one of the few companies that has scaled and reliably hosted AI compute — positioning it to capture outsized demand. While there are concerns over the durability of CRWV’s business model, the unrelenting appetite for AI computing minimizes downside risk.”
The average analyst price target is $47, implying about 22% upside from current levels.
Massive growth, but also massive debt
CoreWeave’s topline numbers are eye-popping. Sales surged 737% in 2024, with analysts forecasting another 156% growth in 2025 and 120% in 2026, according to data from Tikr.
Based on consensus Wall Street analyst estimates, the company is expected to hit $11 billion in revenue by 2026.
While that growth may look impressive, it's largely built on borrowed money, and a lot of it. CoreWeave ended 2024 with $7.9 billion in debt, and analysts expect that to balloon to $21 billion by the end of 2025.
“We expect the stock to provide a wild, lumpy, volatile ride — requiring a risk tolerance that may not exist for most investors,” J.P. Morgan analyst Mark Murphy said in a note Monday.
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