July 18 - CoreWeave (CRWV, Financial) shares slid about 7% on Thursday after HSBC initiated coverage with a Reduce rating and a $32 price target, according to a recent note.
The $32 target implies a roughly 77% drop from Wednesday's close, as analyst Abhishek Shukla flagged the cloud vendor's soaring costs and limited diversification options. CoreWeave's infrastructure is built around GPUs, or graphics processing units, specialized processors designed for AI workloads.
Since going public in March, CoreWeave's stock has more than tripled, but the company's heavy cash burn and high debt have unsettled investors. Shukla noted that Microsoft (MSFT, Financial) accounted for about 72% of first‑quarter revenue and cautioned that hyperscalers may bypass CoreWeave and source GPUs directly from Nvidia (NVDA, Financial).
HSBC also warned that rising data‑center rent, already at 16% of Q1 revenue, and steep financing costs, with implied interest rates near 12.4%, could further pressure margins. As CoreWeave seeks to broaden its customer base, marketing and R&D expenses may climb, potentially squeezing profitability from both ends.
