TLDR
- Bernstein initiated coverage on CoreWeave with an underperform rating and a $56 price target
- The stock was trading around $79.50 at close Wednesday — well above that target
- Analyst Madison Rezaei warned hyperscalers are unlikely to sign more large contracts with CRWV
- Jim Cramer told viewers he’d prefer they buy NVIDIA over CoreWeave
- NVIDIA invested $2 billion in CoreWeave in January, buying 22.9 million shares at $87.20 each
CoreWeave stock dropped 2% Thursday after Bernstein gave it an underperform rating, while Jim Cramer said he’d rather investors buy NVIDIA instead.
CoreWeave, Inc. Class A Common Stock, CRWV
Bernstein analyst Madison Rezaei set a $56 price target on CRWV — that’s nearly 30% below where the stock closed Wednesday at $79.50.
Rezaei acknowledged CoreWeave has done well capitalizing on demand for GPU compute capacity. But the concern is what happens next.
“With a plethora of options, we do not believe hyperscalers will be incentivized to sign further large contracts with CRWV,” Rezaei wrote.
The core of the bear case is straightforward: big cloud players like AWS, Microsoft Azure, and Google Cloud are more likely to build competing infrastructure than keep outsourcing to CoreWeave.
“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 also flagged that as the broader market for compute capacity eases, competitive pressure from larger cloud providers could intensify.
The note hit at a bad time for the stock, which has already been caught up in wider tech sector weakness this week.
Jim Cramer Weighs In
On Thursday, a viewer called into Cramer’s show asking whether CRWV’s recent pullback was a buying opportunity.
Cramer wasn’t sold on it. “Man, you are going into the lion’s den,” he said. “I’d rather have you buy NVIDIA.”
He pointed to several positive developments for NVIDIA in the prior 72 hours as his reason for preferring the chip giant.
Cramer did take a moment to remind viewers of a key piece of CoreWeave’s story. Back on January 26, he highlighted that NVIDIA had invested another $2 billion in CoreWeave, picking up 22.9 million shares at $87.20 per share.
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
That NVIDIA investment remains one of the most talked-about elements of the CoreWeave story.
Jensen Huang appeared on CNBC’s Squawk on the Street alongside CoreWeave CEO Michael Intrator to discuss the deal.
The investment signalled that CoreWeave holds a unique position in the AI infrastructure stack — acting as a channel for NVIDIA chips to reach customers who wouldn’t otherwise have access.
But Bernstein’s view is that this advantage may not hold as the competitive landscape shifts.
The stock fell 2% Thursday in a session that saw broad weakness across tech names. CRWV closed Wednesday at $79.50, giving Bernstein’s $56 target roughly 30% downside from that level.
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