Citi Upgrades CoreWeave as AI Demand Fuels Optimism

New York, NY — Investors are recommended to buy the recent dip in CoreWeave shares due to strong demand for artificial intelligence, according to Citi analyst Tyler Radke. In a recent report, Radke upgraded the AI cloud computing stock from neutral to buy, setting a price target of $160, which suggests a 55% upside based on Wednesday’s closing price.

Although CoreWeave’s stock has more than doubled since its IPO in late March, it has fallen nearly 37% over the past month amid skepticism regarding the company’s $9 billion acquisition of Core Scientific. Radke pointed to Microsoft’s impressive quarterly report as an indicator that demand for AI services remains robust, likely benefiting CoreWeave in the long run.

Radke noted, “We come away with a much stronger fundamental view on the demand picture… We feel incrementally more confident about the durability of AI demand and CoreWeave’s position in the market.” However, he also voiced concerns about customer concentration and CoreWeave’s ability to expand its offerings.

Following the report, CoreWeave shares jumped more than 13% in premarket trading. Meanwhile, Microsoft’s stock surged 8% as the tech giant reported stronger-than-expected earnings. Despite Radke’s positive outlook, Wall Street remains cautious. According to LSEG data, 17 of the 24 analysts covering CoreWeave have rated it as hold, with three others suggesting underperformance, leaving only four analysts recommending a buy.

The broader implications of this analysis suggest that while CoreWeave may face challenges, the outlook remains slightly optimistic if AI demand continues on its upward trajectory.