TSX futures subdued as gold rally takes a breather
Investing.com -- CoreWeave stock moved higher Monday after the company announced a partnership with NVIDIA (NASDAQ:NVDA), even as Kerrisdale Capital revealed a short position in the AI infrastructure provider.
The new agreement creates a framework allowing CoreWeave to sell reserved cloud computing capacity to customers while giving NVIDIA access to any unsold capacity.
The timing of the NVIDIA deal proved fortunate for CoreWeave, as it was announced just before Kerrisdale Capital published a critical report calling the company "the poster child of the AI infrastructure bubble."
In its report, Kerrisdale argued that CoreWeave, which has rallied 30% in the past week and trades nearly 200% above its IPO price from five months ago, is "an undifferentiated, heavily levered GPU rental scheme" rather than a lasting innovation.
The short seller noted that CoreWeave has transformed in three years from "a crypto mining outfit in a founder’s grandfather’s garage" to a self-declared "AI hyperscaler" with a $75 billion valuation.
Kerrisdale expressed concerns about CoreWeave’s customer concentration, with Microsoft reportedly accounting for 70% of revenue. The report claimed Microsoft recently opted against an expansion with CoreWeave, instead signing a larger contract with competitor Nebius.
The short seller also criticized CoreWeave’s financial model, stating it "generates returns below its cost of capital, destroying rather than creating shareholder value." Kerrisdale set a fair value target of $10 for CoreWeave shares, suggesting a potential 90% downside.
Despite these criticisms, investors appeared to focus more on the NVIDIA partnership announcement, pushing CoreWeave shares higher in Monday’s trading session.