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CoreWeave Inc (NASDAQ:CRWV) faces a short-term setback after cutting its fiscal 2025 revenue outlook due to supply constraints, though demand for its artificial intelligence infrastructure remains strong, with backlog up 50% quarter-over-quarter.
Despite a temporary slowdown from construction delays at one data center, CoreWeave boasts a strong AI infrastructure business.
Bank of America Securities analyst Brad Sills maintained CoreWeave with a Neutral and lowered the price forecast from $168 to $140.
Also Read: CoreWeave’s Top Brass Just Sold $1 Billion In Stock After 250% Rally
Sills expects temporary weakness for CoreWeave, calling it a short-term issue in an otherwise strong growth story for one of the most essential AI infrastructure players.
The analyst noted that CoreWeave cut its fiscal 2025 revenue outlook by $150 million to $5.10 billion, mainly due to a supply constraint rather than weakening demand.
He expects this issue to be resolved by the first quarter, emphasizing that demand remains strong. The company's remaining performance obligations (RPO) and backlog grew 50% quarter over quarter, driven by expansion deals with existing AI enterprises and new AI labs.
Despite the setback, Sills said the stock—down about 45% from its June high—looks undervalued compared to peers. It's currently trading at a forward EV/calendar year 2027 EBIT multiple of 19 times, below the neo-cloud group average of 33 times. However, the analyst cautioned that earnings estimates may stay muted until supply issues are fixed. He lowered its price objective, applying a 24 times calendar year 2027E EV/EBIT multiple instead of 25 times, reflecting the one-time delay in bringing new data center capacity online.
CoreWeave's fiscal 2025 capital expenditure guidance was reduced by 40%, from $21.5 billion to $13 billion, while revenue guidance fell 3% to $5.1 billion, implying a 9% hit to fourth-quarter expectations.
The revision stemmed from construction delays at a single data center—one out of 41—which temporarily slowed graphics processing unit installations and delayed revenue recognition, Sills noted.
The company has since added engineering teams at the affected site to prevent further slippage and remains confident the issue will be fully resolved by early next year, the analyst told.
Sills highlighted that the setback is isolated, not systemic, and demand fundamentals remain exceptionally strong. Backlog surged 200% year over year to $55 billion, supported by diverse, long-term commitments from frontier AI companies and large enterprises. Industry indicators reinforce this trend: Anthropic expects $70 billion in revenue by 2028 (up from $9 billion in 2025), OpenAI forecasts $100 billion by 2027 (up from $13 billion now), and Microsoft Corp's (NASDAQ:MSFT) new prepayment-based deal with Bitcoin miner Iren marks a milestone in AI infrastructure contracting.
Sills now expects fourth-quarter revenue of $1.54 billion (down from prior forecast of $1.78 billion) and adjusted EPS loss of $(0.45) (down from previous guidance of $(0.18)).
CRWV Price Action: CoreWeave shares were trading lower by 13.53% to $91.33 at the time of publication on Tuesday.
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