HSBC Global Research initiated coverage on CoreWeave (CRWV) with a Reduce rating and a $32 price target due to weak returns, limited product differentiation, and a heavy dependence on Microsoft (MSFT) and Nvidia (NVDA). As a result, CoreWeave’s stock dropped 7.5% by Thursday’s market close. According to HSBC analysts led by Abhishek Shukla, the software infrastructure company would need to evolve into a general-purpose cloud provider and reduce its reliance on Microsoft and OpenAI in order to improve profitability. It is worth noting that together, both firms accounted for over 72% of revenue and most of CoreWeave’s backlog in Q1 2025.
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Looking ahead, HSBC believes that CoreWeave could see rising costs due to the aging of its GPUs. By 2030, the analysts expect the company to spend about 35% of its revenue on maintaining its hardware, which would lower free cash flow. The analysts also estimate that CoreWeave’s earnings per share from 2027 to 2030 will be around 45% lower than current market expectations. As a result, Shukla believes that the market is too optimistic about the company’s future EBITDA, operating margins, and debt interest rates, which raises concerns about how sustainable its financial performance will be over time.
HSBC also highlighted the risks that are tied to CoreWeave’s dependence on Nvidia and Microsoft. Since Nvidia is the company’s only GPU supplier, CoreWeave has little room to negotiate better pricing. Shukla added that Nvidia may be supporting smaller companies like CoreWeave in order to increase competition in the GPU leasing space. On the customer side, HSBC noted that Microsoft likely used CoreWeave during a GPU shortage and may shift to buying GPUs directly as supply improves. Therefore, this would reduce the need to lease through CoreWeave.
Is CRWV a Good Stock to Buy?
Turning to Wall Street, analysts have a Hold consensus rating on CRWV stock based on four Buys, 15 Holds, and one Sell assigned in the past three months, as indicated by the graphic below. Furthermore, the average CRWV price target of $99.39 per share implies 24.8% downside risk.
