CoreWeave Garners Praise Due To AI Growth, Nvidia Partnership
CoreWeave Inc (NASDAQ:CRWV) stock surged Tuesday after several Wall Street firms initiated coverage with an Outperform or Buy rating.
- BofA Securities analyst Brad Sills initiated coverage on Coreweave with a Buy and a price target of $42.
- Needham analyst Mike Cikos initiated coverage on Coreweave with a Buy and a price target of $55.
Bank of America Securities: Sills noted that CoreWeave is well positioned to capture a share of the $79 billion AI IaaS (infrastructure as a service) market, given its rapid GPU deployment cycle, proprietary software optimized for AI workloads, and strategic relations with top-tiered AI-native companies such as Nvidia Corp (NASDAQ:NVDA), Microsoft Corp (NASDAQ:MSFT), Meta Platforms Inc (NASDAQ:META), and OpenAI.
The analyst’s calls with customers validated CoreWeave as a best-of-breed provider driven by its accelerated GPU deployment cycle, lower failure rates, increase in GPU utilization rate backed by its proprietary software, and access to power and data center technology.
Sills noted that these advantages are sustainable in the near term, at a time when demand for GPUs is accelerating. Moreover, CoreWeave’s proprietary software automates provisioning, load balancing, and observability. Each of these services addresses a separate software category. The ability to sustain a long-term advantage will depend on further developing these services, which could represent new software revenue over time.
Sills projected first-quarter revenue of $849 million and EPS loss of 12 cents.
Needham: Cikos noted that the company’s first-mover advantage and strong execution in a supply-constrained GPU and Power market could drive stronger-than-expected growth as management accelerates economies of scale while lowering the cost of capital.
CoreWeave has generated significant revenue growth since launching the CoreWeave Cloud Platform in calendar 2020. It led to $1.9 billion in revenue in calendar 2024. Cikos attributed the company’s success to the positive supply-demand backdrop. AI demand has far outstripped supply, leading to long wait times for GPUs and Power.
CoreWeave boasts a first-mover advantage and a noteworthy relationship with Nvidia Corp (NASDAQ:NVDA), the analyst added.
The company has also done an impressive job delivering GPUs and data center capacity in a constrained Power market.
Surging demand for AI caught supply chains and underlying infrastructure providers off guard for both GPUs and Power, where Cikos anticipate AI demand to outpace supply for the next 5-plus years.
The CoreWeave model is highly accretive, with a Cash Payback Period of ~2.5 years on investments in GPUs and other Property and equipment, lower than the company’s weighted-average contract duration of ~4 years.
Cikos projected first-quarter revenue of $854 million and adjusted EPS loss of 19 cents.
Price Action: CoreWeave stock is up 8.75% at $38.52 at last check Tuesday.
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