CoreWeave (CRWV) Faces Downward Pressure with Bearish Price Target

Stock under pressure amid concentration, cost, and leverage concerns

HSBC has launched coverage on CoreWeave (NASDAQ: CRWV) with a Reduce rating and a sharply bearish price target of $32 — implying more than 75% downside from current levels near $143.

Key Points from HSBC’s Report:

• Commoditized Growth: HSBC warns the GPU cloud market is becoming commoditized. Despite rapid revenue growth, CoreWeave’s asset turnover (~32%) significantly trails major peers like AWS (~76%).
• Customer Dependence: Roughly 72% of CoreWeave’s revenue and backlog is tied to Microsoft and OpenAI — highlighting significant concentration risk.
• Cost Headwinds: CoreWeave faces heavy fixed costs. Rent expenses equaled 16.4% of Q1 2025 revenue, and power accounted for 6.1%.
• Balance Sheet Strain: CoreWeave posted negative ROE of -121% and free cash flow of -$7.6 billion over the last 12 months. HSBC estimates net debt-to-equity could hit 10x by Q4 2025, raising the risk of covenant breaches.

Market Reaction & Other Analyst Moves:

• CRWV is trading down -3.28% at 138.35
• Consensus across Wall Street remains cautious:
  • Needham downgraded to Hold, citing valuation. PT: $78.
  • Mizuho downgraded to Neutral on July 11. PT: $150.
  • Stifel maintained a Hold with a $115 price target.

Final Take
While investor excitement around AI infrastructure remains high, HSBC’s call serves as a reminder of the execution and financial risks still facing unprofitable players like CoreWeave. The firm stands out as the most bearish voice on the stock to date.