Needham: CoreWeave (CRWV.US) valuation seems too high. Downgraded to "Hold" rating.

Needham downgraded CoreWeave (CRWV.US) rating from 'Buy' to 'Hold', stating that the company's intended $9 billion acquisition of Core Scientific (CORZ.US) "has strategic significance and can release capacity, but the valuation seems to be overly high." CoreWeave announced on Monday that it will acquire data center infrastructure provider Core Scientific in an all-stock transaction, with the transaction valuation estimated at approximately $9 billion. Analysts at Needham, led by Mike Cikos, believe that the acquisition of Core Scientific is strategically important for CoreWeave, as it will free up an additional IT capacity of around 150MW to 200MW for high-performance computing or HPC/AI workloads. Additionally, analysts stated that the deal will allow CoreWeave to have high-quality underlying infrastructure (including sites that can support inference workloads); lower capital costs by leveraging ABS (asset-backed securities) financing supported by data centers; save $500 million in operating expenses annually; and bring in an internal data center operations team. Cikos and his team indicated that they have updated their performance expectations for 2026 and 2027 to reflect adjustments related to the transaction. Analysts believe that the company's valuation is overly high. Earlier this week, following CoreWeave's announcement of the acquisition of Core Scientific, securities firms including Stifel and Mizuho downgraded their ratings on CoreWeave. As of Thursday's closing of the US stock market, CoreWeave fell by 9.64% to $138.29. The stock has risen by 246% year-to-date.