Wall Street sentiment has turned bearish on artificial intelligence (AI) and cloud computing company CoreWeave (NASDAQ: CRWV), despite its standout performance since its IPO in late March.

At the close of the last session, CoreWeave shares fell 3.33% to $159.70. The stock has soared 299% since its initial public offering, driven by surging investor interest and strong ties to Nvidia (NASDAQ: NVDA). 

Yet, two major Wall Street firms have recently downgraded the stock.

Stifel CRWV outlook 

Among the firms, Stifel analyst Ruben Roy downgraded CoreWeave from a ‘Buy’ to a ‘Hold’ rating, although he raised his price target from $75 to $115. 

Roy acknowledged the long-term strategic value of the company’s $9 billion all-stock acquisition of Bitcoin (BTC) miner Core Scientific (NASDAQ: CORZ), but cited “key near-term overhangs” as his reason for moving to the sidelines.

He noted that the deal would help transform CoreWeave into a vertically integrated provider of AI and high-performance computing infrastructure, with approximately 1.3 gigawatts of gross power capacity at closing and over 1 GW of potential future expansion.

“While we are positive on the longer-term benefits from the acquisition, we think there are key near-term overhangs for CRWV to pass. Consequently, we move to the sidelines on the name for now, as we downgrade CRWV to Hold. We raise our target price to $115 from $75,” the analyst said. 

Notably, the all-stock deal values Core Scientific at $20.40 per share and aims to strengthen CoreWeave’s position in AI-focused data centers and energy assets. 

Mizuho CRWV outlook 

Similarly, Mizuho analyst Gregg Moskowitz downgraded the stock from ‘Outperform’ to ‘Neutral,’ while significantly raising his price target from $70 to $150.

Moskowitz said the acquisition strategically positions CoreWeave to scale and gain more control over infrastructure. 

“As such, we are downgrading to Neutral despite materially increasing our price target to reflect recent appreciation in comp multiples, surging demand for AI infrastructure, and what we believe is a means of efficiently acquiring additional capacity at scale via yesterday’s transaction,” the expert said. 

However, the analyst cautioned that the stock’s nearly 300% surge in just three months has pushed its valuation to a level where risk and reward appear more evenly balanced.

Featured image via Shutterstock 

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