CoreWeave Inc. (NASDAQ:CRWV) shares are climbing Monday after Goldman Sachs upgraded the stock to Buy from Neutral, even as it cut its price target to $106 from $139.
- CoreWeave stock is showing upward momentum. Where are CRWV shares going?
Goldman Upgrades CoreWeave After a 43% Drop, Saying Investors Overestimate Its Cost of Capital
Goldman Sachs analyst Gabriela Borges said the $106 target implies about 73% upside from Friday’s $61.39 close. CoreWeave is down 43% since reporting second-quarter results on August 11, including a 24% drop over the last five sessions, which Borges attributed to credit-market volatility and a debate over demand for frontier versus off-frontier AI models.
She argued that investors are overestimating CoreWeave’s future cost of capital and underestimating potential improvements in its returns. "We see CoreWeave’s enterprise value as being directly correlated to the magnitude and durability of the spread between its unlevered IRR and WACC," Borges wrote. Goldman still flags financing at an acceptable rate and a changing demand mix as risks.
Goldman’s analysis points to pricing for short-term compute contracts of three to six months reaching about $40 million per megawatt, and to CoreWeave raising prices by 25% in July and another 10% in October. The new target is based on 18 times estimated EBIT for the fifth through eighth quarters out, down from the 22 times implied by the old $139 target. Credit worries intensified last week as the yield on CoreWeave’s 2032 bonds neared 15%.
CoreWeave Shares Trend Higher
CRWV Price Action: At the time of publication, CoreWeave shares are trading 2.20% higher at $62.74, according to data from Benzinga Pro.
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