CoreWeave (CRWV.US) stock price is falling, and HSBC (HSBC.US) is bearish, indicating that structural disadvantages are difficult to change
According to Woofun AI, CoreWeave Inc. (CRWV.US) is facing a severe crisis of market trust. HSBC Bank (HSBC.US) maintained its “holdings reduction” rating in the latest report and drastically lowered the target price to $39, clearly pointing to the company's deep structural competitive disadvantage in the field of artificial intelligence cloud services.
At Monday's close, CoreWeave (CRWV.US) stock was fixed at $61.39, down nearly 56% from a 52-week high of $139.93. The target price of $39 set by HSBC Bank (HSBC.US) means that there is still 36.5% downside compared to the current closing price.
The core basis for this pessimistic forecast is that HSBC Bank (HSBC.US) has not adjusted its non-GAAP earnings expectations, and these forecasts continue to fall short of the Wall Street consensus. Looking at the revenue structure, HSBC Bank (HSBC.US) estimates that by 2027, CoreWeave (CRWV.US)'s annual revenue per megawatt will be only 12 million US dollars, while the equivalent target for large cloud computing companies is as high as 17 million to 18 million US dollars.
This gap stems from a fundamental difference in business models: large cloud vendors rent computing power through lucrative short-term contracts and provide differentiated general cloud services to cover small long-tail customers; in contrast, emerging cloud service providers such as CoreWeave (CRWV.US) mainly rely on leasing standardized hardware GPU instances from large customers.
Notably, from May to September, emerging cloud service companies signed a number of high-profit short-term contracts. According to data compiled by Woofun AI, CoreWeave (CRWV.US) signed a three-to six-month contract in September at an annual cost of about 40 million US dollars per megawatt; SpaceX (SPCX.US) also reached an agreement with Anthropic and Alphabet (GOOGL.US), with an estimated annual cost of between 22 million and 50 million US dollars per megawatt.
However, HSBC Bank (HSBC.US) sees this high yield trend as difficult to sustain.
Multiple risks at the macro level are eroding this business model. The slow growth of big language model (LLM) service providers may directly weaken demand for spot computing power. At the same time, rising yield and debt market pressure may prevent emerging cloud service companies from building backup computing power facilities that are usually monetized through high-priced short-term contracts. In terms of long-term financial forecasts, the differences are particularly marked: HSBC Bank (HSBC.US) expects non-GAAP earnings per share from 2028 to 2030 to 50% to 70% lower than market consensus; it expects CoreWeave (CRWV.US)'s non-GAAP operating margin to remain between 15% and 16%, far below the 25% previously anticipated by management. Market sentiment worsened, and CoreWeave (CRWV.US) shares fell by about a quarter last week due to investors' questions about how to finance AI projects. The stock fell further by 4.16% to $58.58 in pre-market trading on Tuesday, hitting a 52-week low.
Although HSBC (HSBC.US) is bearish, the opinions of other investment banks are divided. Goldman Sachs (GS.US) upgraded the CoreWeave (CRWV.US) rating from 'neutral' to 'buy' on Monday, but cut the price target from $139 to $106. Analyst Gabriela Borges believes the market may be overestimating the company's future borrowing costs. Evercore ISI (EVR.US) maintains an 'excellent performance' rating, with a target price of $150. The agency's senior director, Amit Darianani, told CNBC that most of CoreWeave (CRWV.US)'s debt is covered by contract guarantees from Meta (META.US), Microsoft (MSFT.US), and OpenAI, which is in stark contrast to the $39 target price set by HSBC (HSBC.US). As of Tuesday's pre-market, CoreWeave (CRWV.US) shares fell 3.98% to $58.68, and the long and short game continues.