CoreWeave's 290% Rally Raises Valuation Fears, Analyst Says 'Upside Has Been Priced In'

by Chris Katje Benzinga Staff Writer

Zinger Key Points

CoreWeave gets downgraded by an analyst after a surge in the share price.
CoreWeave went public in March and shares have soared in value.
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An analyst downgraded AI cloud-computing company CoreWeave Inc. CRWV on Monday based on valuation concerns after its shares soared following its March IPO.

The CoreWeave Analyst: Bank of America analyst Brad Sills downgraded CoreWeave from Buy to Neutral and raised the price target from $76 to $185.

The Analyst Takeaways: CoreWeave stock was downgraded due to overvaluation concerns, and Sills’s new investor note already prices the upside into shares.

The analyst said CoreWeave stock is up 145% since first-quarter financial results.

"We believe much of the near-term upside has been priced in and downgrade our rating to Neutral," Sills said.

The analyst said CoreWeave trades at a premium of 25x for its enterprise value divided by EBIT. Sills is also concerned the company will need "significant debt funding" to help with its capex buildout and revenue upside.

Sills sees CoreWeave’s competition with Microsoft Corporation MSFT, Alphabet Inc GOOGGOOGL, and Amazon.com Inc AMZN as costly, as those companies have "much bigger scale" and can more easily spend on their capex.

While Sills highlighted the company’s high valuation and less upside with the recent share run-up, the analyst had several positive things to say about the stock, alongside the increasing price target.

The note highlights the stock’s positives, including new hyperscaler customers, expansion with OpenAI, and a recent debt raise at a lower rate.

"In Q1, CoreWeave signed a $4 billion expansion deal with OpenAI, only two months after the initial deal was announced in March, bringing the total contract value to $15.9 billion."

Sills aid AI capex growth rates are peaking, but still very healthy.

"Capital expenditures for AI infrastructure are forecasted to reach $206 billion in CY27, growing 4% y/y, down from 65% in CY25."

The analyst said new customer additions could help reduce customer concentration risk.

CRWV Price Action: CoreWeave stock is up 5.3% to $155.11 on Monday versus a trading range of $33.52 to $166.60 since going public. Shares are up 290% since the IPO.

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