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On Friday, JPMorgan increased the price target for CoreWeave (NASDAQ:CRWV) shares from $43.00 to $66.00, while keeping an Overweight rating on the stock. The stock has shown remarkable momentum, with InvestingPro data showing a 28% return in the past week alone and a 64% gain over the last six months. The firm’s analysts highlighted CoreWeave’s impressive first-quarter performance as a public company, which included a significant beat on total revenue and the announcement of major deals with new and existing customers, such as Google (NASDAQ:GOOGL) and OpenAI.
CoreWeave reported total revenue of $982 million in the first quarter, surpassing consensus estimates by $119 million or 14%, and representing a year-over-year growth of over 400%. According to InvestingPro data, the company maintains a strong gross profit margin of 74.3%, though it’s currently not profitable with a negative earnings per share of $5.19. The company’s post-financing (PF) operating income was $162 million, with a margin of 16.6%, which was above expectations in dollar terms but slightly below margin estimates. Capital expenditures for the quarter, including finance leases and construction-in-progress, were reported at $1.9 billion, reflecting the company’s significant investment in growth despite rapid cash burn.
The company disclosed that it had secured a new hyperscaler customer, believed to be Google, and signed a $4 billion expansion deal with OpenAI during the second quarter. These developments are seen as positive steps in diversifying CoreWeave’s customer base and strengthening its position within the AI hyperscaler market.
A new question has arisen regarding what counts as Remaining Performance Obligations (RPO). CoreWeave indicated that the accounting treatment for the OpenAI deal has not yet been finalized, leading to the exclusion of the contract from the RPO balance. Instead, the company has combined GAAP RPO with other amounts of estimated future revenue from existing committed customer contracts to present a ’revenue backlog’ of $25.9 billion in the first quarter, which would increase to approximately $29.9 billion with the inclusion of the OpenAI expansion.
JPMorgan analysts note that while the difference in accounting does not affect the underlying economics, it may take time for investors to understand these dynamics. They also anticipate that CoreWeave may follow similar reporting practices as Amazon (NASDAQ:AMZN) AWS, Google Cloud, and Palantir (NASDAQ:PLTR), which could eventually align investor comfort with the backlog disclosures.
Looking ahead, CoreWeave’s FY25 guidance has seen a significant raise in revenue expectations to $5.0 billion, about $400 million ahead of JPMorgan’s previous forecast. The company also anticipates higher capital expenditures of $21.5 billion to support new business. While acknowledging the ongoing cash burn and the need for incremental capital expenditures, JPMorgan remains positive on the raised revenue guidance. InvestingPro analysis reveals the company’s current market capitalization of $31.6 billion and indicates it’s trading above its calculated Fair Value, with analyst price targets ranging from $36 to $85 per share. Discover more insights and 15+ additional ProTips about CoreWeave in the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers.
In summary, JPMorgan expects CoreWeave stock to provide a volatile experience for investors, with a high level of risk tolerance required. The firm maintains its Overweight rating on the stock and has increased the price target to $66.00.
In other recent news, CoreWeave Inc. reported a remarkable 420% increase in revenue for the first quarter of 2025, reaching $982 million. Despite this significant growth, the company posted a net loss of $315 million, which was notably higher than the previous year’s first-quarter loss of $129 million. The revenue exceeded analyst forecasts of $859.77 million, although earnings per share fell short of expectations. CoreWeave raised its full-year revenue guidance to between $4.9 billion and $5.1 billion, reflecting confidence in its growth trajectory. The company also announced the acquisition of Weights and Biases, enhancing its offerings in the AI developer space. Additionally, CoreWeave expanded its data center operations with a new facility in Spain, indicating strategic growth in its infrastructure capabilities. Analysts from firms like Semi Analysis have recognized CoreWeave’s industry leadership, awarding it a top rating for its AI cloud platform.
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