CoreWeave stock rating reiterated at Outperform by Evercore ISI

Investing.com - Evercore ISI has reiterated an Outperform rating on CoreWeave (NASDAQ:CRWV) with a price target of $175.00, highlighting the durability of the company’s GPU cloud business model despite investor concerns about profitability in the sector. The company, currently trading at $128.83 with a market capitalization of $66.8 billion, has demonstrated strong momentum with a remarkable 222% return year-to-date, according to InvestingPro data.

The research firm emphasized several key aspects of CoreWeave’s business approach that differentiate it from competitors, including multi-year take-or-pay noncancelable contracts with an average duration of four years, with more recent deals trending toward five years or longer.

CoreWeave’s capacity is built only after customer contracts are signed, with the company typically receiving prepayments of approximately 15-25% of total contract value to fund initial capital expenditure requirements, according to Evercore ISI. The firm noted that 98% of CoreWeave’s revenue comes from reserved capacity.

Evercore ISI also pointed to CoreWeave’s master service agreement with NVIDIA, which obligates NVIDIA to purchase residual unsold capacity through April 2032, providing a margin of safety for the company. Additionally, the firm cited management’s confidence that GPUs can be monetized beyond their useful lives.

The research firm’s analysis of a hypothetical $3.2 billion total contract value over four years suggests CoreWeave could achieve 40-50% incremental EBIT margins and approximately 70% incremental EBITDA margin once deployed, with the current mid-teens margin profile attributed to accelerated investments to support growth, revenue timing, and lower scale.

In other recent news, CoreWeave, Inc. announced an agreement to acquire Monolith AI Limited, a company specializing in artificial intelligence solutions for engineering and physics challenges. This acquisition aims to integrate Monolith’s machine learning capabilities with CoreWeave’s AI cloud infrastructure to enhance offerings for industrial and manufacturing enterprises. Additionally, CoreWeave disclosed that a $1.2 billion "put" right associated with its Series C convertible preferred stock has automatically terminated after meeting a stock price milestone. This development was part of a filing with the Securities and Exchange Commission.

In related news, Cantor Fitzgerald reiterated its Overweight rating on CoreWeave, maintaining a $174.00 price target. The firm expressed a positive outlook on CoreWeave following its expanded partnership with Meta. Meanwhile, Core Scientific faced a setback as CoreWeave CEO Michael Intrator confirmed there are no plans to improve CoreWeave’s acquisition offer for the bitcoin mining firm. This announcement came after investor hopes for a higher bid were dashed. These recent developments highlight significant strategic moves and analyst perspectives surrounding CoreWeave.

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