AI computing power shortage continues until 2026. Wells Fargo & Company upgrades CoreWeave (CRWV.US) rating to "hold".

Wells Fargo & Company has upgraded CoreWeave (CRWV.US) from "hold" to "buy," and raised its target stock price from $105 to $170, stating that "demand signals are increasingly strong and cannot be ignored." On Tuesday, CoreWeave's stock price remained stable. Lead analyst Michael Tran stated, "While other software companies are still struggling to monetize artificial intelligence, CRWV is benefiting from the current boom in construction and will continue to benefit from industry supply shortages that are expected to persist until 2026." The analysts mentioned that despite the uncertain long-term outlook for the artificial intelligence market, they chose to upgrade the stock rating because CoreWeave has demonstrated the ability to expand towards the largest consumer base for artificial intelligence computing power, which could help increase its market share over time. Key factors supporting the analysts' optimistic outlook include: affirmations from large-scale enterprises confirming stronger-than-expected demand for artificial intelligence; significant order volumes from recent artificial intelligence labs across the industry; substantial adjustments in capital expenditures by large-scale enterprises; updated unit economic assumptions by Wells Fargo & Companyhigher demand driving GPU pricing per hour from $2 to $2.5, and NVIDIA Corporation (NVDA) commitment to underwrite all unused computing power (terms that could benefit CoreWeave). Other factors supporting the bullish outlook include: potential for upward profit margin estimations (gradual formation of a vertically integrated technology stack, financing rates better than expected); ongoing expansion of benchmark clients such as Microsoft Corporation (MSFT.US), OpenAI, and Alphabet Inc. Class C (GOOGL.US); and expectations that the end of the company's IPO lock-up period will reduce future stock price volatility.