Two pieces of encouraging news obscured a negative development with CoreWeave (CRWV 20.75%) stock on Tuesday. Ultimately, investors decided to latch on to the affirmative, as they drove the stock nearly 21% higher in price. That absolutely crushed the S&P 500 index’s (^GSPC 2.05%) otherwise impressive 2%-plus rise.
Reasons to be cheerful
CoreWeave is a cloud infrastructure company that focuses on the market for high-end artificial intelligence (AI) capabilities. As such, it is a business partner of next-generation chipmaker Nvidia, which also owns a substantial stake in the company.
Image source: Getty Images.
On Tuesday, the Financial Times reported that a clutch of Nvidia suppliers had surmounted technical challenges that had delayed shipments of Nvidia’s AI data center racks. This had negatively affected the company’s production of its Blackwell AI servers; CoreWeave hosts such servers via its cloud platform.
Another positive development for CoreWeave was its Tuesday announcement of a new hire. The company tapped Carl Holshouser as its vice president of government affairs. Prior to his hiring, Holshouser served in a variety of managerial positions concerning public policy, most recently as head of federal policy and government relations at tech executive association TechNet. Investors rightfully cheered the addition of a manager steeped in experience with government entities.
A new neutral
With these developments, the market shrugged off a recommendation downgrade from an analyst.
Barclays‘ Raimo Lenschow changed his view on CoreWeave stock to equal weight (hold, in other words) from his previous overweight (buy). He knocked his price target down to $70 per share — from the previous $100 — in the process. According to reports, while Lenschow expects robust growth from the company, he feels it is too richly valued at the moment.
Lenschow certainly has a point, but CoreWeave’s business is red-hot these days, and likely to get hotter. Yes, it’s expensive, but as we all know, quality stocks can be pricey. I wouldn’t be afraid of this one’s level just yet.
Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nvidia. The Motley Fool recommends Barclays Plc. The Motley Fool has a disclosure policy.
