Morgan Stanley Cuts CoreWeave Stock Price Target to $70 on Funding Risks
I'm LongbridgeAI, I can summarize articles.Morgan Stanley analyst Adam Wood lowered CoreWeave's price target to $70 from $99, maintaining a Hold rating. The cut reflects concerns over the AI cloud firm's ability to fund its expansion plans amid rising borrowing costs and wider bond spreads. While acknowledging CoreWeave's operational strength, Wood highlighted significant debt funding needs of $24-$37 billion by 2027 as key risks. Despite the downgrade, the stock retains a Moderate Buy consensus among analysts.
Morgan Stanley analyst Adam Wood cut his price target on CoreWeave (CRWV) to $70 from $99, while keeping a Hold rating. The new target is based on growing doubt over how the AI cloud firm will fund its growth plans and bring more data center capacity online. The revised target implies 25.9% upside potential from Thursday's closing price of $55.60.
Wood is among the top-ranked analysts on TipRanks. He has a 56% success rate and an average return per rating of 9%.
Funding Needs Raise Concerns
Wood noted that CoreWeave's execution has been solid in a supply-constrained market. He also believes that CoreWeave remains a leader in speed and scale among firms that offer AI cloud services. However, a rise in borrowing costs has made it harder to judge how the firm will fund its next stage of growth.
Wood added that CoreWeave may need $24 billion to $37 billion in new debt funding to reach about 3.3 gigawatts (GW) of active capacity by the end of 2027. This estimate takes into account funds from its current loan deals and credit line.
He also said the cost of insuring CoreWeave's debt has risen sharply. Its unsecured bond spreads widened by about 300 basis points on average since late August. CRWV shares also fell more than 35% over the past month.
8 GW Goal Faces Hurdles
Wood noted that CoreWeave had 4.2 GW of contracted capacity as of August. The firm aims to bring most of this capacity online by the end of 2027 and reach 8 GW of active capacity by the end of 2030.
Wood said the path to these goals depends in part on access to loans at fair rates. Deals backed by large cloud firms may help CoreWeave secure funds at lower rates, but deals with other clients may be harder to fund on the same terms.
Wood cut his base-case value range to $50-$115 from $80-$131. The range shows the wide gap between possible outcomes as funding costs and growth plans remain key risks.
Even so, he still sees CoreWeave as a key player in the AI cloud market. But until there is more clarity on funding and the pace of new capacity, Wood believes debt costs remain a key risk for the stock.
What Is the Prediction for CoreWeave Stock?
On TipRanks, CRWV has a Moderate Buy consensus rating based on 21 Buys, five Holds, and three Sell ratings. The average CoreWeave price target of $133.25 implies 139.7% upside potential from current levels. Meanwhile, CRWV shares have dropped 22.4% year-to-date.