CoreWeave, Inc. (NASDAQ:CRWV) is one of the AI Stocks on Wall Street’s Radar. On July 17, HSBC initiated the stock as “Reduce” with a $32 per share price target. The firm said it sees too many negative catalysts and that Coreweave could be in big trouble soon.
According to analyst Abhishek Shukla, Coreweave’s revenue comes from only a few customers that also use their own software. This has been diluting its “value proposition.”
“CoreWeave’s key customers, namely Microsoft, Open AI, and Nvidia, do not use CoreWeave’s software services, according to SemiAnalysis,” the analyst said. “We believe this diminishes the competitive advantage and customer lock-in CoreWeave gets from its unique offering. In 1Q25, 72% of CoreWeave’s revenue came from Microsoft. Microsoft and Open AI together account for the vast majority of the company’s backlog.”
Shukla pointed out that the stock is overvalued. Coreweave is also suffering from higher borrowing costs, low asset turnover, and anticipated high capital expenditure costs due to the short shelf life of graphic processing units.
“Assuming that GPUs will need to be replaced after 6-7 years of use, the result would be high capex simply to maintain steady-state revenue beyond 2030e,” the analyst said. “The continued high capex requirement well beyond the high-growth phase of the company is one of the key reasons behind our low [discounted cash flow] valuation of CoreWeave.”
The firm also warned that Coreweave’s liquidity looks “stretched.”
“Contrary to consensus for a steep decrease, we expect CRWV’ s blended average interest rate to remain elevated. As it diversifies into customers with lower credit ratings than Microsoft (impacts borrowing cost) and we believe Open AI has not extended a material cash advance despite committing to USD15bn-plus of offtake, CoreWeave’s liquidity looks stretched.”
CoreWeave, Inc. (NASDAQ:CRWV) is a cloud platform provider that provides equipment for AI and other computing purposes.
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