CoreWeave started at Neutral on stretched valuation after five-fold rally

Published 25/06/2025, 15:20
© Reuters.

Investing.com -- H.C. Wainwright began coverage of CoreWeave Inc with a Neutral rating saying the cloud-computing firm’s shares have outrun fundamentals after quintupling since their March initial public offering.

The brokerage said CoreWeave’s focus on high-performance, graphics-chip-based infrastructure for artificial-intelligence workloads puts it at the centre of a fast-growing market.

The New Jersey-based company runs more than 250,000 GPUs across 33 data centres and was first to deploy Nvidia’s new GB200 systems, giving it a technological edge, analyst wrote.

But the stock’s jump to about $173 from a $40 IPO price has lifted CoreWeave’s market value to roughly $83 billion, a level Wainwright called “stretched” given heavy spending plans and looming financing needs.

The firm noted CoreWeave expects to invest $20 billion to $23 billion this year to meet customer obligations and already carries about $10.7 billion of debt against $2.5 billion in cash.

“Splitting the gap between debt and equity suggests a 55-plus million share issuance,” analyst at HCW said, warning that potential dilution and headline risks could weigh on the stock in the near term.

Analyst added that even with strong demand from customers such as Microsoft (NASDAQ:MSFT) and OpenAI, “investors may want to give the shares time to digest the recent move.”

CoreWeave’s long-term, take-or-pay contracts provide revenue visibility, the report said, but the company faces execution risks as competition among cloud providers intensifies.

Wainwright sees the AI-enhanced high-performance computing market growing 7-10 per cent annually to about $87 billion by 2034, yet says CoreWeave must raise substantial capital to capture that opportunity.

CoreWeave shares were up 1.4% at $175.06 in early trading on Wednesday.

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