A Bold Bet in AI and Cloud Computing with High Potential Risks

CoreWeave has garnered significant attention in the market throughout the year. On Wednesday, the AI and cloud computing hyperscaler attracted a fresh round of activity when Cantor Fitzgerald initiated coverage of its shares with an Overweight rating and a $116 price target. Already 128% higher in the past six months, shareholders have one query: how high can the AI-powered rally allow shares to ascend?

Why Cantor Fitzgerald Is Bullish

A bullish yet sober note about CoreWeave emerges from Cantor Fitzgerald. This highlights the need for a healthy balance between a significant market opportunity and the dynamic risks associated with execution. In other words, the positive growth rate is enormous, yet it will not occur without some turbulence.

The target is based on a 7.0x multiple of the firm’s enterprise value, projected to 2026 revenue, with a price target of $116. Although this can be seen as high, Cantor states that such a multiple is slightly less than the 8.0x average among its peers in infrastructure software, excluding Palantir. Investors are paying a premium, but not an irrational one, compared to industry benchmarks, primarily due to the expectation of achieving growth.

Analysts of Cantor also note two key tailwinds:

• Secular AI demand: CoreWeave would benefit from long-term AI demand using compute resources to train LLMs, which are proliferating and being aggressively scaled by OpenAI, Anthropic, Meta, and other smaller players.
• Short-term capacity fluctuations: The current squeeze on specialized GPUs (specifically NVIDIA GPUs in the top tier) means providers like CoreWeave have been able to charge premium prices for their capacity today.

Nonetheless, the report does not avoid risks. Some of the identified concerns that were flagged are:

• A considerable level of customer concentration, meaning that a small number of customers contribute a significant amount of revenue.
• Financing issues, due to the Capital-intensive infrastructure expansion.
• Power implementation vulnerabilities are a concern, given that hyperscale data center rollouts will require significant power generation limitations, which are already being experienced throughout the AI ecosystem.

Recent Market Analysts’ Moves

Cantor’s making this move follows other recent analyst movements around CoreWeave. On May 2, the firm H.C. Wainwright upgraded the rating to Buy and maintained a price target of $180. This is a significantly higher bullish sentiment compared to Cantor and serves as an indicator of how Wall Street remains divided on the question of CoreWeave’s valuation.

In the meantime, MoffettNathanson raised its CoreWeave forecast to $65 but maintained a Neutral rating. This slower target is due to the tempered sentiment about the already lengthy advance of the stock.

Another twist to this occurrence is that Jane Street Group disclosed that it owns 5.4% of CoreWeave, making it the fourth-largest shareholder. This trading indicates that the long-term value of the company is worthwhile to sophisticated trading firms, despite the volatility.

Additionally, banks such as JPMorgan, Goldman Sachs, and Morgan Stanley, CNBC reported, had made large block trades of CoreWeave at amounts in the $97 range, indicating institutional rebalancing. Such exchanges frequently absorb market liquidity around hot growth stocks but also bring into question the distribution of risk between large holders.

Figuring out the Hype behind CoreWeave

There is no strange fervor behind CoreWeave. It has branded itself as an AI and high-performance computing (HPC) cloud infrastructure provider. Its bet on specialized capacity is unlike that of the giants such as Microsoft, Amazon, and Google.

It achieved this by establishing a close relationship with NVIDIA, becoming one of the largest independent users and purchasers of its GPUs. The near-monopolistic hold that NVIDIA enjoys in the GPU market has caused CoreWeave to become a vital parallel infrastructure, as it attracts demand that does not find its place with NVIDIA.

Whenever NVIDIA introduces a new generation of GPUs, hyperscale incumbents secure the initial deployment; CoreWeave takes advantage of the second-strike customers that have missed out on cutting-edge computing at scale.

This type of business is cyclical in nature because the margins can be squeezed at once, matching the supply or loss of pricing power. 

Competitive Position

Any evaluation of the long-term potential of CoreWeave should be compared to its competitors. Amazon AWS remains the most popular cloud provider, with over 4.19 million businesses worldwide using its services as of 2025. Microsoft Azure is expanding at a faster rate in AI integration, particularly through non-exclusive partnerships with OpenAI. Google Cloud has a smaller market share, but it is closely tied to Google’s research in the field of generative AI.

Compared to its much larger competitor, CoreWeave is much smaller in absolute terms, but this agility is a benefit. In contrast to the conventional hyperscalers with legacy workloads, CoreWeave can dedicate the majority of its infrastructure to AI applications. This dedicated approach is something that customers would want to consider, given their caution about being tied down in a multi-service cloud ecosystem dominated by Big Tech.

Additionally, CoreWeave has positioned itself as user-friendly, offering quicker provisioning, transparent pricing, and reduced switching effort for AI creators. This is opposite to established market leaders that tend to focus on large, long-term enterprises.

Financial Reality

Investors must consider financial fundamentals, despite the high buzz surrounding CoreWeave. The revenues of CoreWeave are increasing rapidly, but analysts on Wall Street argue that it has a chance of trading below its fair value as per the existing share price.

The target provided by Cantor Fitzgerald indicates significant earnings growth until 2026. The 7.0x EV/revenue ratio assumes that CoreWeave will be able to maintain its top-line growth at the level of marginal improvement. However, such an aspiration comes with an enormous capital outlay, the construction of new data centers, the acquisition of new power supplies, and securing long-term chip supplies.

Interest rates remain high at the end of 2025, and thus, funding terms on capital-intensive activities remain rigid. Among reviewers, there is concern that a delay in project implementation or an increase in borrowing interest rates would strain free cash flow and expose debt.

Risks that Cannot Be Ignored

CoreWeave is a business that has difficulties despite the appearance of good prospects in terms of expansion:

• Customer concentration: It is noted that CoreWeave has a relatively small customer base among major AI developers. The loss of one would be significant in terms of revenues.
• Bottlenecks in funding: CoreWeave requires billions to fund the building of data centres. This is an upfront project whose ability is limited by a tightening of the capital markets.
• Energy bottlenecks: The issue with AI is that it is one of the most energy-consuming facilities in the world. It has already become an industry bottleneck to achieve sustainable and reliable electricity on scale. It will be a heavy burden to carry, and as more ESG watchfulness spreads its influence, CoreWeave must be on the cutting edge to counter it.
• Competitive counteraction: The Big Three cloud players do not intend to pay CoreWeave to take away large shares of the pie without resistance. The AI-ready infrastructure-based competition can be translated into a price war or profit beating.

The Wider Landscape of AI in the market

The AI market, in general, is a rapidly growing enterprise. Precedence Research found that the global AI market is projected to expand from 2023 to 2033. The global artificial intelligence (AI) market size is expected to reach approximately 3,077.32 billion by 2033, and it is projected to grow at a CAGR of 19.1%, necessitating the infrastructure, which puts CoreWeave in the center of this crucial hardware/software stack.

Nevertheless, despite the undisputed market size, it is unclear what share of that pie CoreWeave is supposed to occupy. In contrast, Amazon AWS generated only 107 billion in the same period alone in 2024, and it is reasonable to believe that the amount CoreWeave will grow to throughout the remainder of its youth, present and future will fall nowhere near this mark. This shows the potential and the instability. CoreWeave can grow rapidly, but it is currently far behind incumbents in terms of volume.

Future Outlook

The sign of whether CoreWeave will proceed will be its ability to balance the risk of execution versus the potential for a significant opportunity.

In the short term, CoreWeave is riding a perfect storm: ongoing deficits of GPUs, strong demand for LLMs, institutional confidence, and favorable analyst coverage. The company has no issues when it comes to capturing headlines, and this, in itself, can propel the shares even higher.

During the middle term, the story is more dangerous. Customer diversification, capital efficiency and terms of financing will be tested. Its high rating could be justified if CoreWeave can demonstrate that it is profitable on a steady level as its infrastructure is expanded. Yet failure to produce would have annihilated hundreds of multiples in a comparatively short period.

The long-term question to which CoreWeave will need to provide answers is whether the company is a niche provider of AI infrastructure or, in fact, a hyperscaler in the broad sense of the word, with a potential role to play in replacing Amazon, Microsoft, and Google. The very fact that firm initiations will be executed by one of the leading financial institutions is a telling testament to why Institutional finance is viewing CoreWeave as not a gamble. Instead, it is being positioned as a plausible yet dangerous growth vehicle within the AI arms race.

The market is yet to learn to adapt its expectations of AI, and in the next few quarters, CoreWeave will be among the more convincing experiments in investor trust in the age of artificial intelligence.