CoreWeave Bulls Should Brace For 'Wild, Lumpy, Volatile Ride,' JPMorgan Says

Core Viewpoint - CoreWeave Inc. is experiencing turbulence in its growth trajectory, leading JPMorgan to downgrade its rating to Neutral with a price target of $110, down from $135, despite a strong long-term opportunity in AI infrastructure [1] Financial Performance - CoreWeave's backlog nearly doubled to a record $56 billion during the third quarter, indicating strong demand for AI services [1] - Revenue grew 134% year over year, and operating income exceeded estimates by $40 million [4] Operational Challenges - A significant delay from a third-party data center developer has impacted construction schedules, causing CoreWeave to shift revenue from Q4 to Q1 [2] - Management has cut FY25 revenue guidance by $150 million and reduced CapEx by $8.5 billion due to these supply chain issues [2] Client Acquisition and Demand - New clients such as Crowdstrike Holdings Inc., Rakuten Group Inc., Poolside AI, Jasper Therapeutics Inc., and NASA have joined CoreWeave's customer base, showcasing its growing market presence [4] - CoreWeave Federal is also emerging, serving government agencies like NASA's Jet Propulsion Lab and the UK government, indicating sovereign demand [4] Long-Term Outlook - Despite short-term challenges, JPMorgan remains optimistic about CoreWeave's long-term growth, projecting a 166% revenue increase in FY25 and a more than doubling of CapEx in 2026 [5] - The company is viewed as a tremendous long-term opportunity, although investors may need to exercise patience due to expected volatility in stock performance [6]