TLDR
- Bernstein began coverage of CoreWeave by assigning an underperform rating alongside a $56 price objective
- Wednesday’s closing price stood at approximately $79.50, significantly exceeding the analyst’s target
- Madison Rezaei from Bernstein expressed doubts about hyperscalers committing to additional major agreements with CRWV
- Jim Cramer advised his audience to consider purchasing NVIDIA ahead of CoreWeave
- NVIDIA completed a $2 billion investment in CoreWeave during January, acquiring 22.9 million shares priced at $87.20 per share
CoreWeave shares experienced a 2% decline Thursday following Bernstein’s assignment of an underperform rating, while Jim Cramer expressed his preference for NVIDIA as an investment choice.
CoreWeave, Inc. Class A Common Stock, CRWV
Madison Rezaei, analyst at Bernstein, established a $56 price objective for CRWV, representing approximately 30% below Wednesday’s closing price of $79.50.
Rezaei recognized that CoreWeave has successfully taken advantage of strong demand for GPU compute resources. The question centers on future prospects.
“With a plethora of options, we do not believe hyperscalers will be incentivized to sign further large contracts with CRWV,” Rezaei wrote.
The primary argument behind the bearish stance appears clear: major cloud providers including AWS, Microsoft Azure, and Google Cloud will likely expand their own infrastructure rather than continue relying on CoreWeave for outsourced services.
“Hyperscalers are more likely to attempt head-on competition, going after GPU cloud business as the natural adjacency to traditional cloud, and cannibalizing CRWV’s market,” Rezaei added.
The analyst highlighted that expanding compute capacity availability across the market could lead to heightened competitive threats from established cloud infrastructure giants.
The timing of this research note proved challenging for CoreWeave shares, which have faced pressure alongside broader technology sector volatility throughout the week.
Jim Cramer Weighs In
During Thursday’s broadcast, a viewer contacted Cramer’s program to inquire whether the recent CRWV price decline presented a purchase opportunity.
Cramer expressed skepticism about the idea. “Man, you are going into the lion’s den,” he said. “I’d rather have you buy NVIDIA.”
He referenced multiple favorable developments for NVIDIA during the previous 72 hours as justification for his preference toward the semiconductor leader.
Cramer took time to revisit an important aspect of CoreWeave’s narrative. During his January 26 show, he emphasized that NVIDIA had completed another $2 billion investment in CoreWeave, purchasing 22.9 million shares at $87.20 each.
At the time, Cramer called it “a fantastic verification for CoreWeave,” describing the company as NVIDIA’s preferred chip distribution partner for customers who can’t get direct GPU allocations.
NVIDIA’s $2 Billion Bet
The NVIDIA investment continues to serve as a central element in discussions about CoreWeave’s business position.
Jensen Huang made an appearance on CNBC’s Squawk on the Street with CoreWeave CEO Michael Intrator to address the transaction.
The investment demonstrated CoreWeave’s distinctive role within the AI infrastructure ecosystem, functioning as a distribution channel for NVIDIA chips to reach clients who lack direct access.
Bernstein’s perspective suggests this competitive advantage may face challenges as market dynamics evolve.
The stock dropped 2% Thursday during a session marked by widespread selling pressure across technology stocks. CRWV finished Wednesday at $79.50, meaning Bernstein’s $56 target implies approximately 30% potential downside from that closing level.
