‘Wild, lumpy, volatile’: Wall Street initiates coverage on CoreWeave stock after rocky public debut

CoreWeave (CRWV) stock popped Tuesday, rising over 8% as Wall Street analysts initiated coverage of the Nvidia-backed (NVDA) AI firm that made its public debut in late March.

Some six analysts at investment firms including JPMorgan (JPM), Barclays, and Jefferies gave CoreWeave a Buy rating, as their bullish takes on the AI market outweighed worries over the stock’s volatility.

“While there are concerns over the durability of CRWV’s business model, we believe that the unrelenting appetite for AI compute minimizes the downside risks,” said Jefferies analyst Brent Thill, who estimates shares will rise more than 40% to $51 over the next 12 months.

CoreWeave provides computing power to Big Tech, using its mass supply of Nvidia (NVDA) GPUs. In fact, CoreWeave is one of the largest holders of AI chips, period: JPMorgan estimates it has the fifth- to sixth-largest pool of GPUs in existence.

“We believe we’re still in the very early innings of this buildout for AI, and CRWV being one of the few who has been able to scale & host AI compute reliably, is positioned well to capture this opportunity,” Thill wrote.

The company completed a rocky IPO in late March that was rescued at the last minute by Nvidia, with the AI chipmaker and CoreWeave customer purchasing $250 million worth of CoreWeave shares and anchoring their price at $40.

CoreWeave stock soared more than 50% to a high of over $60 in the days following its public debut, before losing almost half its value as President Trump’s trade salvos sent stocks across the board tumbling. Shares fell more than 9% Monday, closing at $35.

Bears remain concerned that CoreWeave’s customers are highly concentrated. Some 77% of CoreWeave’s 2024 revenue came from just two customers, with 62% coming from Microsoft (MSFT).

The cloud company and data center operator also faces $7.5 billion in debt repayments by the end of next year, the Financial Times reported.

“We remain cautious due to significant reliance on MSFT,” wrote Citi analysts Tuesday, giving CoreWeave a Neutral rating. “This dependency poses risks as MSFT has signaled AI CapEx slowdowns.”

Meta (META) and Big Tech “hyperscalers” — the massive tech firms that operate mammoth data centers, including Google (GOOG), Amazon (AMZN), and Microsoft — are set to spend around $325 billion in 2025.

CoreWeave also recently scored a $12 billion contract with OpenAI, though the ChatGPT-maker itself is losing money.

But Big Tech’s AI spending could die down as the companies look to generate a return on their mass infrastructure investments — and that path to monetizing AI remains a fear factor for investors — in an increasingly volatile macroeconomic environment.