CoreWeave Stock (CRWV) Plunges as Bernstein Assigns Sell Rating, Says It Is ‘Meaningfully Overvalued’

CoreWeave CRWV -6.08% ▼ stock plunged more than 6% on Thursday as Bernstein initiated coverage of the AI cloud company with a Sell rating and a price target of $56. The investment firm highlighted the risks ahead and stated that the stock is “meaningfully overvalued today.” The AI infrastructure company recently announced mixed fourth-quarter results and weak guidance.

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Interestingly, on Wednesday, CRWV stock jumped about 8% after announcing a partnership with Perplexity.

Here’s Why Bernstein Is Bearish on CoreWeave Stock

Bernstein acknowledges that CoreWeave has successfully capitalized on the solid demand for specialized GPU cloud capacity from hyperscalers and AI model developers, growing revenue from $229 million in 2023 to $5.1 billion in 2025. The firm added that CRWV has established itself as the largest, pure-play AI cloud company. Bernstein expects CoreWeave to sign more multi-billion-dollar contracts through 2026-2027 (It estimates $35 billion in incremental signings over the next two years).

However, Bernstein is concerned about what will happen as data center capacity begins to increase. It highlighted that hyperscalers are “self-building” an estimated 36 GW of additional data center capacity, which is expected to come online by the end of 2028, along with any lease deals they are signing with traditional data center providers. With many options available, Bernstein believes that hyperscalers are less likely to sign further large contracts with CoreWeave.

“In fact, we believe hyperscalers are more likely to attempt head-on competition, going after GPU cloud business as the natural adjacency to traditional cloud, and cannibalizing CRWV’s market,” cautioned Bernstein.

Also, Bernstein disagrees with CoreWeave’s belief that its existing software moat will be strong enough to withstand competition from hyperscalers. The firm added that if CoreWeave’s growth slows, the company’s high debt and limited margin flexibility could create pressure. Given this risk, Bernstein believes CRWV stock is significantly overvalued, “with the market implicitly modeling a $162B backlog to justify its valuation.”

Is CRWV a Good Stock to Buy?

Currently, Wall Street has a Moderate Buy consensus rating on CoreWeave stock based on 11 Buys, eight Holds, and one Sell recommendation. The average CRWV stock price target of $114.83 indicates 55% upside potential from current levels.

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