Prospects for growth are promising! CoreWeave (CRWV.US) received bullish ratings from two investment banks.

Earlier this week, CoreWeave (CRWV.US) announced a new order agreement with NVIDIA Corporation (NVDA.US) based on the agreement signed on April 10, 2023, with an initial value of up to $6.3 billion. The agreement aims to provide reserved cloud computing capacity for CoreWeave's customers and allow NVIDIA Corporation to purchase the remaining idle capacity when customers do not fully utilize their data center capacity. According to the terms of the agreement, NVIDIA Corporation commits to purchasing the remaining unused capacity from CoreWeave between 2025 and April 13, 2032, subject to CoreWeave meeting delivery and service availability conditions. This arrangement not only helps CoreWeave improve capacity utilization but also provides more computational support for NVIDIA Corporation in the fields of artificial intelligence and high-performance computing. Raymond James, a well-known Wall Street investment firm, initiated coverage on CoreWeave with an "outperform" rating and a target price of $130. Analysts at Raymond James led by Josh Beck stated that the rating and target price reflect their optimistic view on the sustainability of the law of large numbers, based on the growth of inference vectors and the commercialization of inferences. They believe that the current market's capital expenditure forecast for the AI six giants is too low compared to their bottom-up expectations. The analyst pointed out that the so-called "AI six giants" Amazon.com, Inc. (AMZN.US), Alphabet Inc. Class C parent company Alphabet (GOOGL.US), Meta Platforms (META.U), Microsoft Corporation (MSFT.US), CoreWeave, and Oracle Corporation (ORCL.US) are expected to have capital expenditures close to $900 billion by 2028, significantly higher than the current market estimate of approximately $550 billion. The analyst stated that AI networks (such as NVIDIA Corporation's collective communication library NCCL, Infiniband scalable hierarchical aggregation and reduction protocol SHARP), security (dedicated Kubernetes clusters), and novelty in building AI cloud stacks (reducing the relevance of traditional cloud CPUs, virtualization, and Ethernet architectures) are all underestimated. The analyst added that they have a constructive view of the founder-led management team and believe they have the capability to address challenges in expanding the AI software stack, power, financing, and customer diversification, achieving the expansion target of $20 billion in annual recurring revenue (ARR) by the end of 2027. Meanwhile, Citizens upgraded their rating on CoreWeave from "in line with the market" to "outperforming the market," with a target price of $180. Citizens stated that the total addressable market (TAM) for Graphics Processing Units as a Service (GPUaaS) is growing rapidly. Citizens analyst, led by Greg Miller, stated: "Combining the record $450 billion RPO (remaining performance obligations) and the Nebius report stating that Microsoft Corporation has awarded it contracts worth about $17 billion (mainly for GPUaaS), we believe that large-scale outsourcing is accelerating. Therefore, despite some obvious flaws in the long-term existence of this business model, we believe the GPUaaS business could grow from its current $3-4 billion to around $300 billion." Citizens analysts pointed out that since covering CoreWeave, they have consistently emphasized that most investors in the stock do not fully understand how the company generates revenue or fully grasp the risks associated with this long-term business model. The analyst said: "Following a 30% drop in the stock price after the company's second earnings report and new expectations of pressure on profit margins in the second half of 2025, we believe investor sensitivity remains high. Nevertheless, we believe the wave of large-scale outsourcing by enterprises will overshadow potential negative factors in the short term."