JPMorgan doubled its target on CoreWeave ahead of its report. But optimism is cautious

A JPMorgan analyst has doubled his target price on shares of CoreWeave, a provider of cloud services for developing and training AI models. The new target implied a slight increase in the company's stock price, but after the raise, the stock jumped, and given this rally, it is already worth more. JPMorgan believes CoreWeave's long-term prospects in AI are "clear" and remain intact, but warns that investors should be prepared for surprises.

JPMorgan analyst Mark Murphy raised the target price of CoreWeave shares from $66 immediately to $135 and maintained an Overweight rating equivalent to a recommendation to buy these securities, CNBC reports. This happened on the eve of the company's quarterly report - it will be published on Tuesday, August 12, after the end of the main session.

Murphy said he is "cautiously optimistic" about CoreWeave's long-term prospects, especially after the company signed a five-year, $11.9 billion contract with OpenAI earlier this year. The company's growth potential in AI is "evident" and "persistent," the analyst said, but the time lag between receiving large orders and fulfilling them can limit CoreWeave's results in certain quarters and lead to "persistently high volatility" in the stock.

"CoreWeave's capacity will become increasingly large and irregular - probably to the surprise of investors, although we are not giving a specific forecast for the upcoming second-quarter reporting. Investors should expect a highly uneven pattern of large orders from CoreWeave," the investment bank analyst wrote.

He estimates that while the outcomes of CoreWeave contracts are difficult to predict, if successful, they have the potential to generate impressive growth and attract significant debt financing.

At the close of trading on August 11, CoreWeave shares rose 6% to close at $139.8. This became their high for almost a month. After this rally, JPMorgan's new, increased target, which initially suggested a slight increase, was 2.4% below Monday's close.

Since listing on the Nasdaq exchange on March 28, making it the largest tech IPO in the U.S. since 2021, the company's market value has soared 254%. Investors bought up so rapidly that some analysts even began comparing CoreWeave's securities to "meme" stocks, whose growth is attributed to hype among retail traders rather than actual financial performance. It was the hottest bet in the AI market, Barron's recalls .

Since peaking in mid-June, however, the stock has lost about 25%. Its high valuation has raised questions on Wall Street, given its significant debt load and reliance on Microsoft as a major customer, Barron's explains. And the market has little faith in CoreWeave returning to previous prices, the publication writes. It recalls that many are waiting for the end of the post-IPO period, during which insiders and early investors can't sell their shares. That period expires on Aug. 14.

On July 31, Citi analyst Tyler Radkey upgraded CoreWeave's stock rating from Neutral to Buy and maintained a $160 target price - it's nearly 16% above its Aug. 11 closing level. Radkey cited strong demand for computing power for artificial intelligence, but noted that CoreWeave's securities are high-risk due to customer concentration and limited trading history since its IPO in March. The analyst added that he expects CoreWeave's revenue growth to accelerate in 2026 and already forecasts it to be 4-6% above market consensus for fiscal years 2026-2027. He said the strengthening position of Microsoft's Azure cloud platform as well as major cloud announcements from Oracle have boosted confidence in the sustained demand for AI and cemented CoreWeave's position in the market.

On the same day, Morgan Stanley analyst Keith Weiss raised his target price on CoreWeave shares from $58 to $91, but maintained an Equal Weight rating (at market level). He said the first quarter after going public confirmed that the company is performing well amid growing customer demand. Weiss believes that this, along with quality execution and strong results above expectations, sets the stage for an upgrade in outlook, but the impending removal of post-IPO restrictions on share sales to large shareholders could temporarily weigh on shareholder value.

64% of analysts who have assigned ratings to CoreWeave have a neutral stance with a "Hold" recommendation. Another 24% advise investors to buy the company's securities, while the rest - to sell. The Wall Street consensus target price of $111.5 implies a nearly 20% drop from the close of August 11.

This article was AI-translated and verified by a human editor