'Lacks uniqueness': short-seller calls CoreWeave's share price 12 times overvalued

Kerrisdale Capital, an investment firm that often plays on the downside, has warned investors against being overly optimistic about artificial intelligence cloud infrastructure provider CoreWeave. Kerrisdale has opened a short position on CoreWeave and argues that the company's stock should be worth many times its price.

"CoreWeave is not creating the future of artificial intelligence - it's a leveraged GPU rental business (graphics card architecture is well suited for AI - Oninvest) with no competitive advantage, disguised as innovation," the Kerrisdale report said.

Since CoreWeave's IPO in March 2025, its stock price has tripled. But Kerrisdale estimates that their fair price is just $10 a share - 12 times lower than their current value on the stock exchange. Shortist said it doesn't think buying CoreWeave shares is a smart way to invest in AI, and its stock rally is mostly due to the success of competitors. The investment firm pointed to Microsoft' s $17.4 billion deal with Nebius and Oracle's high revenue outlook.

"Bulls are clinging to the 'insatiable demand' narrative and hoping a tidal wave will lift all boats. The reality is more complicated: these announcements indicate strong demand for AI, but also show that CoreWeave lacks uniqueness as its anchor customers sign big contracts with competitors," Kerrisdale wrote.

Shortist also stated that CoreWeave lacks key elements necessary for sustainable growth: proprietary technology, patents, and a competitive advantage that would allow for preferential access to electricity in a shortage. In addition, the Kerrisdale report claims that CoreWeave fails basic financial due diligence. "The company generates returns below its cost of capital, destroying rather than creating shareholder value," the short-seller said, calling CoreWeave's business model fragile and burdened by debt.

Two previous Kerrisdale reports - on Aurora Innovation in August and on Pure Storage in early September - led to a decline in the quotations of these companies. But the CoreWeave report was not met with a negative reaction from Wall Street: on the day of its publication on September 15, CoreWeave shares jumped 9% on news of a large contract with Nvidia and then consolidated around $120 per share.

On September 16, U.S. financial holding company Raymond James initiated research coverage on CoreWeave's stock, giving it an Outperform rating (Outperform, consistent with a Buy recommendation) with a target price of $130 per share. Raymond James believes that CoreWeave's largest customers are willing to spend more on AI than Wall Street forecasts, and that CoreWeave itself will meet the challenges of scaling its business and diversifying its customer base.

According to FactSet, the consensus rating on CoreWeave shares has increased from neutral (Hold) to "above market" (Overweight) over the past month. The average target price of $128.41 per share calculated by the service implies a 6% upside potential for CoreWeave.

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