CoreWeave Stock Hits Record High On $4B OpenAI Deal
Nvidia-backed AI company CoreWeave (CRWV) has secured a deal worth $4 billion to provide cloud computing capacity to ChatGPT maker OpenAI, expanding the partnership between the two companies. The stock rose more than 4.5% in midday trade on Thursday, hitting a new all-time high of nearly $73 and extending its rally to a fourth straight session.
In a filing with the Securities and Exchange Commission (SEC), the artificial intelligence (AI) leader has committed to pay CoreWeave $4 billion over the next four years. The new deal builds on a previously announced $12 billion collaboration between CoreWeave and OpenAI, disclosed in March ahead of CoreWeave’s public debut, which also gave OpenAI a significant equity stake.
Analysts' Reactions
During the post-earnings call on Wednesday, CoreWeave management said that it had signed a $4 billion deal with an AI enterprise, but did not disclose the name of the company. The company posted a net loss of $1.49 per share during its maiden quarterly report, wider than the $0.62 per share loss reported a year ago. Analysts' reactions to the company’s first quarter (Q1) were mostly positive, according to investor notes cited by TheFly.
Barclays raised its price target on CoreWeave’s stock to $70 from $60 with an ‘Overweight’ rating. It said the company’s 14% revenue beat and 420% year-over-year (YoY) revenue growth “shows the power of the new generative artificial intelligence businesses.” Bank of America (BofA) raised its price target to $76 from $42 with a ‘Buy’ rating on the shares, stating that the company’s Q1 results "validate that CoreWeave is well positioned to capitalize on the rapidly growing AI infrastructure industry." Jefferies, Wells Fargo, Morgan Stanley, and others also raised their respective price targets on the stock, citing the company’s revenue jump as a promising sign of growth.
However, DA Davidson had a more bearish take, downgrading CoreWeave’s stock to ‘Underperform’ from ‘Neutral’, but with an unchanged price target of $36. The brokerage said that CoreWeave is “not a business worth scaling, and we question the value of the equity.” CoreWeave’s stock has gained over 79% since going public in April.
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