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On Tuesday, Jefferies began coverage on CoreWeave (NASDAQ:CRWV) by issuing a Buy rating and establishing a price target of $51.00. The firm’s analysts highlighted CoreWeave’s strong positioning to capitalize on the burgeoning demand for AI compute capabilities. The stock, currently trading at $35.42, has shown significant volatility and is trading near its 52-week low of $33.52. According to Jefferies, CoreWeave is one of the few companies that has successfully scaled and hosted AI compute resources in a reliable manner, which places them in a favorable position within the industry.
The analysts at Jefferies estimate the price target based on 14 times the expected enterprise value to calendar year 2027 adjusted EBIT (earnings before interest and taxes). They expressed confidence in the early stage of AI infrastructure buildout and CoreWeave’s potential to seize a significant share of this expanding market. With a remarkable revenue growth of 737% and a robust gross margin of 74%, CoreWeave demonstrates strong operational efficiency. InvestingPro analysis suggests the stock is currently undervalued, with additional insights available to subscribers.
Although there are questions concerning the long-term sustainability of CoreWeave’s business model, Jefferies believes that the ongoing and intense need for AI compute resources mitigates potential downside risks. They see the current appetite for AI capabilities as a positive sign for the company’s future performance. InvestingPro data reveals 12 additional key insights about CoreWeave’s financial health and growth prospects.
The initiation of coverage by Jefferies serves as a professional assessment of CoreWeave’s market prospects and financial outlook. The Buy rating indicates that the firm’s analysts expect the stock to perform well and that investors may consider it a potentially profitable addition to their portfolios.
CoreWeave, listed on NASDAQ, specializes in providing scalable and reliable AI compute solutions, which are increasingly in demand as AI technologies continue to advance and integrate into various sectors. The $51.00 price target set by Jefferies reflects their optimistic view of the company’s growth trajectory and market opportunity.
In other recent news, CoreWeave is reportedly in advanced discussions with Google (NASDAQ:GOOGL) to lease Nvidia (NASDAQ:NVDA) Blackwell chips, which are specialized for artificial intelligence applications. This potential agreement underscores the challenges faced by major Nvidia customers, including Google, in securing adequate chip supplies to meet the growing demands of their clients. CoreWeave’s strategic position with Nvidia and its focus on AI-centric data centers have attracted interest from major cloud services and AI developers like OpenAI and Meta Platforms (NASDAQ:META). Additionally, CoreWeave plans to reduce the size of its US initial public offering to approximately $1.5 billion, revising the terms to offer around 37.5 million shares at $40 each. This is a significant adjustment from the original plan to sell 49 million shares priced between $47 and $55 each. The new terms are expected to be announced soon. Meanwhile, the demand for Nvidia GPUs continues to exceed supply, highlighting the importance of the potential deal between Google and CoreWeave. This ongoing demand is further emphasized by major AI entities like xAI and OpenAI expressing the need to expand their GPU resources.
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