According to Woofun AI, CoreWeave Inc. (CRWV.US) is facing a severe market confidence crisis. HSBC Holdings plc (HSBC.US) maintained its 'Underweight' rating in its latest report and sharply cut its target price to $39, explicitly pointing to the company's deep-seated structural competitive disadvantages in the AI cloud services sector.
At Monday's close, CoreWeave Inc. (CRWV.US) shares settled at $61.39, a decline of nearly 56% compared to the 52-week high of $139.93. The $39 target price set by HSBC Holdings plc (HSBC.US) implies a further 36.5% downside from the current closing price. The core basis for this pessimistic outlook is that HSBC Holdings plc (HSBC.US) has not adjusted its non-GAAP financial forecasts, and these projections consistently remain below Wall Street consensus.
From a revenue structure perspective, HSBC Holdings plc (HSBC.US) estimates that by 2027, CoreWeave Inc. (CRWV.US) will generate only $12 million in annual revenue per megawatt, while the equivalent metric for large cloud computing companies is as high as $17 million to $18 million. This gap stems from a fundamental difference in business models: major cloud providers rent out computing power through highly profitable short-term contracts and offer differentiated general cloud services to cover long-tail smaller customers; in contrast, emerging cloud service providers like CoreWeave Inc. (CRWV.US) primarily rely on leasing standardized hardware GPU instances to large customers.
Notably, between May and September, emerging cloud service companies signed several highly profitable short-term contracts. Data compiled by Woofun AI shows that CoreWeave Inc. (CRWV.US) signed three-to-six-month contracts in September at an annual cost of approximately $40 million per megawatt; SpaceX (SPCX.US) also reached agreements with Anthropic and Alphabet Inc. (GOOGL.US), with estimated annual costs ranging from $22 million to $50 million per megawatt. However, HSBC Holdings plc (HSBC.US) believes this high-yield trend is unsustainable.
Multiple macro-level risks are eroding this business model. Slowing growth among large language model (LLM) service providers could directly weaken demand for spot computing power. At the same time, rising yields and debt market pressures could hinder emerging cloud service companies from building the backup computing infrastructure that is typically monetized through high-priced short-term contracts.
Divergence is particularly pronounced in long-term financial forecasts: HSBC Holdings plc (HSBC.US) projects non-GAAP earnings per share for 2028 to 2030 that are 50% to 70% below market consensus; it expects CoreWeave Inc. (CRWV.US) to maintain a non-GAAP operating margin of 15% to 16%, far below management's previous guidance of 25%.
Market sentiment subsequently deteriorated. Amid investor doubts about how AI projects are being financed, CoreWeave Inc. (CRWV.US) shares fell by about a quarter last week. In pre-market trading on Tuesday, the stock dropped a further 4.16% to $58.58, hitting a 52-week low. Despite HSBC Holdings plc (HSBC.US)'s bearish stance, other investment banks hold divergent views. The Goldman Sachs Group, Inc. (GS.US) upgraded CoreWeave Inc. (CRWV.US) from 'Neutral' to 'Buy' on Monday, but lowered its target price from $139 to $106. Analyst Gabriella Borges believes the market may be overestimating the company's future borrowing costs. Evercore ISI (EVR.US) maintained its 'Outperform' rating with a target price of $150. Senior Managing Director Amit Daryanani told CNBC that most of CoreWeave Inc. (CRWV.US)'s debt is backed by contracts with Meta Platforms, Inc. (META.US), Microsoft Corporation (MSFT.US), and OpenAI, sharply contrasting with the $39 target price set by HSBC Holdings plc (HSBC.US). As of Tuesday's pre-market session, CoreWeave Inc. (CRWV.US) shares were down 3.98% at $58.68, with the battle between bulls and bears still ongoing.
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