CoreWeave Inc. (NASDAQ:CRWV) stock rose in Wednesday’s premarket trading as Wall Street analysts remained divided over the AI cloud provider’s growth prospects and mounting debt.
Bulls point to CoreWeave’s limited AI-computing capacity, long-term customer contracts and expanding infrastructure. However, bears warn that rising borrowing costs, heavy debt and competition from major cloud providers could pressure profitability.
Nasdaq futures gained 0.41%, while S&P 500 futures rose 0.07%.
Compass Point Highlights CoreWeave’s AI Capacity Advantage
Compass Point senior analyst Michael Donovan remains bullish on CoreWeave, citing its secured power capacity and expanding technology offerings.
Donovan told CNBC on Monday that CoreWeave had about 1.85 gigawatts of powered capacity at the end of the second quarter. He expects the company to secure roughly 3 gigawatts by the end of 2027.
He identified limited AI-computing capacity as a major industry bottleneck.
Donovan also defended CoreWeave’s financing model. The company borrows against customer contracts that typically run three to five years.
Under this structure, GPUs backed by five-year agreements could become fully paid for around the third year. That would allow them to generate additional cash to meet corporate obligations.
He described the business as “complex, but not complicated,” emphasizing execution and longer GPU useful lives.
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HSBC Warns of Lower Margins and Competitive Pressure
HSBC maintained its Reduce rating and $39 price forecast, citing structural disadvantages compared with major cloud providers.
The bank expects CoreWeave to generate about $12 million in annual revenue per megawatt in 2027. That compares with $17 million to $18 million for hyperscalers.
According to HSBC, major cloud providers benefit from diversified businesses and more profitable short-term customers. Meanwhile, neocloud operators depend heavily on large clients renting relatively standardized GPU capacity.
HSBC’s adjusted earnings estimates for 2028 through 2030 remain 50% to 70% below Wall Street consensus. The firm also expects long-term operating margins of 15% to 16%, well below management’s roughly 25% target.
Evercore and Goldman Sachs Defend CoreWeave’s Debt Strategy
Evercore ISI analyst Amit Daryanani maintained an Outperform rating and $150 price forecast.
Daryanani said much of CoreWeave’s financing is backed by contracts with Meta Platforms, Inc. (NASDAQ:META), Microsoft Corporation (NASDAQ:MSFT) and OpenAI, carrying borrowing costs of around 5.5%.
However, he argued that investors are placing too much emphasis on unsecured debt yielding 14% to 15%.
Evercore estimates project-level returns on invested capital of 15% to 20%. The firm believes CoreWeave could absorb a 100- to 200-basis-point increase in borrowing costs without significantly weakening project economics.
Meanwhile, Goldman Sachs analyst Gabriela Borges upgraded CoreWeave to Buy from Neutral. However, she lowered her price forecast to $106 from $139.
Borges argued that investors may be overstating CoreWeave’s future borrowing costs while overlooking stronger project returns and recent increases in computing prices.
Credit Markets Could Determine CoreWeave’s Next Move
Despite analysts’ bullish arguments, financing remains a major concern.
Great Hill Capital Chairman Thomas Hayes warned that skepticism in the bond market could keep CoreWeave’s borrowing costs elevated.
Shorecliff Asset Management’s Grant Nachman cautioned that large unsecured financing deals could become prohibitively expensive for neocloud operators.
Meanwhile, MetLife Investment Management’s John Yovanovic highlighted the substantial supply of AI-related debt expected to enter credit markets over the next 18 months.
The contrasting views underscore a central question for investors: Can CoreWeave turn surging AI infrastructure demand into sustainable profits before financing costs erode its returns?
Analyst Consensus and Recent Actions
CoreWeave carries a consensus Buy rating with an average price forecast of $131.35.
On Oct. 20, HSBC maintained its Reduce rating and $39 price forecast. Goldman Sachs upgraded the stock from Neutral to Buy on Oct. 19, setting a $106 forecast. Meanwhile, Mizuho maintained its Neutral rating on Oct. 15 but lowered its price forecast to $88.
CRWV Price Action: CoreWeave shares were up 2.21% at $63.50 during premarket trading on Wednesday, according to Benzinga Pro data.
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