Truist Upgrades CoreWeave to ‘Buy,’ Anticipating Significant Upside Despite Recent Volatility

Investors may find a strategic opportunity in CoreWeave before a potential rebound, according to Truist Securities. The bank has upgraded the cloud infrastructure provider from “hold” to “buy.” While Truist slightly reduced its price target from $131 to $126, this still suggests a 58% upside from Tuesday’s closing price.

“We view CRWV’s risk-reward as attractive because: 1) Continued enterprise adoption of open models and sovereign AI is driving broader demand, 2) CRWV trades at a significant discount to other neoclouds despite its market leadership, and 3) There is potential for incremental margin expansion if current six-year GPU depreciation cycles prove conservative,” analyst Arvind Ramnani stated in a Tuesday client note.

The cloud infrastructure firm’s shares have declined 35% over the last three months, trading approximately 48% below their 52-week high of $153.20. This downturn follows an early May report indicating that CoreWeave’s interest expenses more than doubled during the first quarter, sparking concerns regarding the sustainability of its rising debt load.

The stock also faced pressure in July after Meta announced it would sell excess artificial intelligence computing capacity to third-party developers, positioning the company as a direct competitor to CoreWeave. However, Ramnani suggested that Meta’s move may not impact the stock as severely as anticipated.

“While we view Meta’s entry into the space as a risk, we believe Meta will maintain its existing contracts and terms,” the analyst noted. “If Meta chooses not to renew, we expect other enterprises to absorb the computing capacity.”

Truist’s optimistic outlook aligns with the broader consensus among Wall Street analysts. According to LSEG data, 24 of the 38 analysts covering CoreWeave maintain a “buy” or “strong buy” rating on the stock.

Source link