CoreWeave Gain’s New Analyst Coverage, As Bearish As They Come – Stock Unmoved

CoreWeave's stock (NASDAQ: CRWV) has been a standout IPO this year, revelling in the AI infrastructure boom, having added 250% since the coming to public markets at the end of March. Whilst sentiment has been strong, some dissent from analysts, and a 16.8% pullback in the past month of trading raise some questions for the bulls.

HSBC has initiated coverage with a “Reduce” rating and a startling $32 price target, implying a 77% downside from its current $143.04 price. The announcement has failed to shake confidence for now, with the stock trading up 0.5% in the pre-market session.

HSBC’s analysts question the long-term viability of CoreWeave’s business model. At the core of their skepticism: the increasing commoditization of the GPU cloud market. While CoreWeave has carved out a niche with specialized AI infrastructure, HSBC argues that returns are compressing as competition heats up.

The company’s revenue is heavily dependent on high-tech customers who bring their own software, a dynamic that HSBC believes “dilutes” CoreWeave’s value proposition. In essence, CoreWeave provides the hardware, but the innovation and value add remain with its customers, limiting the company’s ability to command premium pricing and robust profits.

The most alarming aspect of HSBC’s analysis is its financial outlook: their earnings estimates for 2027–2030 are a staggering 45% below consensus, signaling a fundamental disagreement about CoreWeave’s growth and profitability. HSBC anticipates “weak” free cash flow and persistent high spending, a combination that could strain the balance sheet and restrict investment in future growth.

This is especially relevant given CoreWeave’s aggressive expansion, including a $6 billion AI data center project in Pennsylvania and the $9 billion Core Scientific acquisition. The company is expected to spend between $20 and $23 billion in capital expenditures in 2025 alone; ambitious, but risky if revenue growth lags behind.

Despite these concerns, CoreWeave retains several strengths. Its early mover advantage in GPU cloud, strategic partnerships with Nvidia and Google (via Google’s OpenAI partnership), and insatiable AI infrastructure demand provide a solid foundation. For now, markets seem to be dismissing HSBC's concerns, but keep an eye out for any signs that the thesis is holding up.