CoreWeave Inc (NASDAQ: CRWV) stock jumped by approximately 30 per cent on Tuesday on news of a data centre leasing deal with Applied Digital (NASDAQ: APLD).
The company’s stock is presently trading at USD$156, which represents a 290 per cent increase over its IPO price of $40.
The recent USD$7 billion, 15-year AI infrastructure deal with Applied Digital, pushes the CoreWeave further into its growing role in the high-performance computing (HPC) space. It also capitalizes on the booming demand for AI infrastructure.
Additionally, the company’s recent USD$12 billion compute deal with AI-pioneer, OpenAI and its USD$1.7 billion acquisition of Weights & Biases reinforce its strategic growth.
These moves position the company at the center of the AI infrastructure boom. Investors have taken notice, especially with a USD$29.9 billion revenue backlog. CoreWeave expects 20 to 25 per cent of that backlog to convert annually over four to five years. This level of visibility adds to investor confidence and reinforces the company’s long-term potential.
It also doesn’t hurt the company’s fortunes that tech-giant Nvidia Corp (NASDAQ: NVDA) has increased its stake in CoreWeave.
As both a supplier and investor, Nvidia’s involvement signals strong belief in CoreWeave’s future. That support enhances CoreWeave’s market credibility, particularly given Nvidia’s standing in the AI chip market.
CoreWeave’s Q1 2025 earnings report added fuel to the rally. Revenue rose 420 per cent year-over-year to reach USD$981.6 million. In response, analysts at JPMorgan Chase and Needham & Co. raised their price targets to USD$66 and USD$75. This suggests analysts see long-term value even after its rapid climb.
Read more: Calgary mayor wants to use AI to make local roads safer
Read more: Telescammers are now using AI to mimic the voices of your loved ones
Bullish sentiment in AI sector propels the stock
Momentum remains strong despite a rich valuation. CoreWeave trades at a forward price-to-sales ratio of roughly 11, a high number by historical standards. Yet bullish sentiment in the AI sector continues to propel the stock. Technical indicators such as a rising MACD support the upward trend. Posts on social media talk about CoreWeave’s “meteoric post-IPO rise,” even as some warn about its overbought conditions.
However, risks such as significant capital expenditures (USD$20–23 billion planned for 2025), a net loss of USD$314.6 million in Q1, and high customer concentration, such as 62 per cent of 2024 revenue from Microsoft Corp (NASDAQ: MSFT) could work to counter long-term enthusiasm. The present stock surge appears driven by a combination of fundamental growth signals, strategic wins, and speculative fervour in the AI market, though its high valuation suggests caution for risk-averse investors.
.
