A recent report by The Information raised concerns about Oracle’s (ORCL) margins in the artificial intelligence (AI) cloud business. Amid this scenario, Evercore analyst Amit Daryanani stated that it is worth revisiting the unit economics of the AI-powered cloud company CoreWeave (CRWV), given investor concerns following The Information article about Oracle’s GPU (graphics processing unit) cloud profitability. Based on his analysis, Daryanani reiterated a Buy rating on CoreWeave stock with a price target of $175, saying that he continues to have a “positive view on CRWV fundamentals.”
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Interestingly, Coreweave stock jumped about 9% on Wednesday, after the company announced the launch of Serverless RL, which will train AI agents using reinforcement learning (RL).
Top Analyst Remains Confident about CoreWeave Stock
Daryanani stated that despite the capital expenditure intensity and debt financing required to deploy GPU clouds, he views CoreWeave’s model as “durable, risk-managed, and profitable at scale,” even after considering elevated depreciation expenses. The 5-star analyst added that CRWV’s business model reflects resilience and profitability potential, with the AI hyperscaler effectively managing risk with durable contracts and strategic partnerships.
Commenting on CoreWeave’s unit economics, Daryanani highlighted that the company’s business model is backed by multi-year, non-cancellable contracts averaging 4-5 years in duration. Such contracts provide a stable revenue stream. He highlighted that CRWV builds capacity only after securing contracts, minimizing speculative risks.
The top-rated analyst believes that CoreWeave’s Master Services Agreement with Nvidia (NVDA) provides a “safety net” for any unutilized capacity, significantly reducing downside risk. Among other positives, Daryanani noted that CRWV receives upfront payments covering 15-25% of the total contract value (TCV) to fund initial capex, reflecting the company’s strong cash flow management.
He also pointed out that the incremental EBIT (earnings before interest and taxes) margin estimate in the range of 40% to 50% and the EBITDA (earnings before interest, taxes, depreciation, and amortization) margin estimate of ~70% reflect solid profitability once assets are fully depreciated. While Daryanani highlighted several positives, he cautioned investors about CoreWeave’s customer concentration risks, with Microsoft (MSFT)/OpenAI (PC:OPAIQ) representing a significant portion of its revenue.
Is CoreWeave a Good Stock to Buy?
Currently, Wall Street has a Moderate Buy consensus rating on CoreWeave stock based on 15 Buys, 11 Holds, and two Sell recommendations. The average CRWV stock price target of $154.42 indicates 10.3% upside potential. CoreWeave stock has jumped significantly to $139.98 from its initial public offering (IPO) price of $40.
