CoreWeave Pulls Back 5% As Analyst Releases Bearish Stock Commentary

CoreWeave's stock price (NASDAQ: CRWV) finds itself in the rather uncommon position of trading negative on the day, down 5.35% on analyst commentary, and concerns over it's runaway valuation.

The company, which provides scaling, support, and acceleration for GenAI through GPU compute, CPU compute, storage, and networking services, boasts an impressive $73.5 billion market capitalization and $2.71 billion in revenue (TTM). It also carries a substantial net loss of $1.15 billion (TTM) and an EPS of -$5.19.

DA Davidson this morning highlighted concerns about CoreWeave's reliance on debt financing, suggesting that the company's interest obligations could potentially wipe out any claimed cash generation for shareholders, reinforcing their “Underperform” rating with a $36 price target.

This echoes concerns raised following its IPO on March 28, 2025, priced at $40 per share, where the company’s significant debt of $5.5 billion in long-term obligations became a focal point.

The recent surge in CoreWeave's stock price, up 283% since the IPO just 2 months ago, has also caused some to liken the stock to a Meme stock.

Adding to the complexity is the analyst outlook. While the general consensus is a “Buy” rating, the average price target of $73.30 represents a potential downside of more than 50% from current levels. This stark discrepancy suggests that the market's current valuation of CoreWeave may be detached from fundamental analysis, potentially driven by speculative fervor surrounding the AI sector.

While CoreWeave has genuine demand for their services, the question remains whether investors are overpaying for that growth.

Furthermore, CoreWeave faces customer concentration risks. In 2024, Microsoft accounted for a staggering 62% of its revenue. This reliance makes CoreWeave vulnerable to strategic shifts by its largest client. Recent reports indicate that Microsoft has reduced its commitments to CoreWeave, walking away from significant data center capacity, further exacerbating concerns about revenue stability and future growth.

The recent comments from DA Davidson, citing concerns about CoreWeave's business scalability and equity value, adds another layer of uncertainty. The firm's analysis suggests that CoreWeave's detailed earnings report and guidance have only confirmed these issues.

CoreWeave's stock will have plenty of happy holders, who have ridden a bullish to some truly impressive gains. Yet considering both sides of the coin is always healthy when building a position. The company operates in a rapidly growing market with significant potential, but its financial challenges, customer concentration, and the risk of speculative trading cannot be entirely dismissed.