"It's Not Enough to Believe in a Dream": Why Analysts Are Divided in Their Assessment of CoreWeave
A 112% increase in revenue isn't enough for Bernstein to consider the stock attractive
CoreWeave has impressed analysts with its results, but its stock isn't appealing to everyone / Photo: jackpress / Shutterstock
CoreWeave, a provider of computing power for artificial intelligence systems, released its second-quarter report, which impressed even the most bearish analysts, according to CNBC. The company reported a 112% increase in revenue and a backlog of orders exceeding $100 billion. This prompted JPMorgan and Bernstein to raise their price targets for the company’s stock, the network reports.
CoreWeave’s stock rose as much as 24% during trading on Wednesday, August 12—a move that could help offset the losses the company’s stock has suffered recently, CNBC notes. Over the past three months, CoreWeave has lost 16% amid concerns about the sustainability of its business model, particularly as its debt burden has grown. The stock also fell after Meta announced in July that it would sell its excess computing power for artificial intelligence tasks to third-party developers—a move that will intensify direct competition with CoreWeave, the network notes.
Here's what Wall Street analysts are saying following the report
— JPMorgan: Hold rating; target price raised from $110 to $120. This implies a 33% increase in CoreWeave’s share price relative to the most recent closing price.
“CoreWeave’s results met investors’ expectations on a key metric—margin trends. This has reinforced confidence that strong demand is driving growth not only in revenue and remaining contract obligations (RPO), but also in net income for AI infrastructure providers, including CoreWeave itself. “Although profitability was the focus of the quarterly results, we believe that the positive takeaways from the earnings report and comments during the investor call were largely related to the business’s long-term prospects,” wrote JPMorgan analysts.
— Bernstein: Sell rating; price target raised from $67 to $74, which still implies an 18% decline in the stock price.
“Let’s give them credit: this is the best report the company has ever presented. We’ve previously written about the team’s operational shortcomings, but they pulled it off this quarter. <…> We even like the plan to build a [data center] in Indonesia. Is that enough to believe in the dream of ‘neo-clouds’? Unfortunately, no,” wrote Bernstein analysts.
— Citi: Buy rating, target price of $142, which implies a 57% increase from the closing price on August 11.
"Amid widespread concerns surrounding non-cloud providers, CoreWeave sent a confident signal in the second quarter. The report showed that demand for AI remains high, pricing is strengthening (a 25% price increase across all product lines), the software and token businesses are growing, and margin metrics exceeded expectations,” the bank noted.
— Barclays: Recommendation to hold the stock; target price of $90, which corresponds to the closing price on August 11.
"Following the last quarter, there was a lot of focus on operating leverage, and the company saw a significant increase in this area; we expect this trend to continue as new capacity comes online in the coming quarters," according to Barclays.
— Deutsche Bank: Buy rating, target price of $150. This target implies a 66% increase in CoreWeave’s share price relative to the most recent closing price.
“The company is ahead of schedule in its capacity expansion. <…> It also continues to lay the groundwork for future growth, adding $5 billion to its order backlog during the quarter (plus more than $25 billion at the start of the third quarter) and increasing total contracted capacity to 4.2 GW as of early August, up from 3.5 GW previously,” according to Deutsche Bank analysts.
This article was AI-translated and verified by a human editor
