CoreWeave IPO Performance Likely Due To Company, Not AI Sector: Analyst Says 'Investor Sentiment Remains Mixed'

Backed by NVIDIA Corporation NVDA, cloud infrastructure company CoreWeave, Inc. CRWV had one of the most anticipated IPOs in years with its market debut Friday.

Analysts share their reactions after the IPO priced below an expected range of $47 to $55 and closed its first day at $40, equaling its IPO price.

Rosenblatt on CoreWeave: The technology company's IPO debut was disappointing but could prove to be a positive for miners shifting to high-performance computing, Rosenblatt analyst Chris Brendler said in an investor note.

"The market has been taking a ‘glass half empty' approach lately, but we still think CoreWeave's IPO and HPC deal with Galaxy are positive developments for our bull case on miners," Brendler said.

The analyst said power is still in short supply and Bitcoin miners can supply large loads of power. Brendler said CoreWeave's IPO may be "disappointing and discouraging for the overall IPO market."

One item that likely helped was the company's capital commitments from investors like Nvidia, the analyst added.

"As a public company, we not only expect improved visibility on the opportunity but also boost CRWV's ability to raise additional capital. As a result, we think we'll see more lease agreements with miners given advantaged access to power."

The analyst highlighted a new 15-year lease between Galaxy Digital BRPHF and CoreWeave announced Friday.

D. Boral on CoreWeave: The AI company has an IPO that went off with challenges, D. Boral Capital analyst Jesse Sobelson said.

"Initially aiming to raise up to $2.7 billion, the company ultimately settled for $1.5 billion, pricing shares at $40," Sobelson said.

The analyst said Nvidia helped backstop the offering, buying shares directly with investor demand falling short of initial expectations.

"CRWV's business model revolves around renting high-performance GPU infrastructure to companies requiring substantial computational power for AI, machine learning, and other GPU-accelerated workloads."

Sobelson said the company being unprofitable and having $7 billion in debt may have overshadowed the $1.9 billion in revenue it had last year.

The analyst said partnerships with Nvidia, OpenAI and Microsoft show confidence in the long-term potential of CoreWeave, but may not be enough for investors at the lofty valuation.

"Investor sentiment remains mixed, especially so given Microsoft's recent comments on moderating its AI infrastructure commitments."

The analyst said the lackluster IPO shouldn't be a warning for AI stocks, but rather a reflection of the broader market conditions and risks specific to CoreWeave.

"As CRWV's public market performance unfolds, investors will be closely watching for signs of stabilization and evidence that the company can maintain momentum despite potential headwinds."

CRWV Price Action: CoreWeave stock is down 7.31% to $37.04 on Monday. The stock has traded between $36 and $41.94 since going public Friday.

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