CoreWeave drops even as Cantor Fitzgerald joins 'buy the dip' crowd
Ignatiev
CoreWeave (CRVW) shares dropped more than 5% in premarket trading on Friday, even as Cantor Fitzgerald joined the chorus of Wall Street firms telling investors to “buy the dip.”
Cantor analyst Brett Knoblauch, who has an Overweight rating and $176 price target on CoreWeave, said the recent “fearmongering” about the company has led to “one of the most attractive times” to buy the stock.
“CRWV has the public support of NVDA—the most influential company when it comes to AI,” Knobluach wrote in a note to clients. “CRWV also already sold out nearly all of the capacity coming online for 2027. NVDA also has an agreement to backstop any unsold capacity. The mania in the market is not about demand, it is about CRWV's ability to fund the capex to meet that demand. On that point, we would advise investors to take a step back and look at how CRWV's business has consistently improved. When CRWV went public, we estimate it was getting $10-11m/MW of revenue while generating ~15% contribution margins on those deals. Fast forward to today, we believe it is closer to $20m/MW, and it is generating 25-30% contribution margins. This results in chips, which is what capex is being spent on, paying for themselves in 2-2.5 years versus 4 years. CRWV has historically relied on asset-backed facilities to fund capex. Those facilities receive interest and principal as the chips generate cash flow. If demand is not an issue, repaying the debt is thus not an issue.”
Investors have become particularly concerned about heavily indebted AI infrastructure providers such as CoreWeave, whose shares plunged more than 15% Wednesday as yields on its debt surged. The company's difficulties have raised questions about whether specialized cloud computing providers can continue financing rapid expansion without placing excessive strain on their balance sheets.
Research firm Gartner added to those concerns with a forecast that 80% of so-called neocloud providers could cease operating independently by 2030.
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