CoreWeave gets 'buy' rating from UBS as AI compute demand strengthens

CoreWeave (NASDAQ:CRWV) shares received an initial 'Buy' rating and a $120 price target from UBS, implying about 40% upside, as the bank said strong artificial intelligence (AI) compute demand could support further growth. UBS said Street sentiment towards CoreWeave remained cautious, reflected in a valuation of only about three times expected 2027 revenue despite strong demand signals across the AI infrastructure market. The bank said investors could be underestimating the strength and durability of AI compute demand from enterprises as well as frontier artificial intelligence laboratories. UBS also expects GPU pricing trends to drive CoreWeave's revenue per gigawatt from about $11 billion currently to more than $15 billion over time. The bank said its checks showed CoreWeave had established a reputation for reliability and performance that distinguished it from competitors in the AI compute hosting market. UBS said a positive view on CoreWeave effectively represented a broader call for investors to return to AI-focused stocks, supported by muted sentiment, strong demand signals and reported growth among frontier laboratories. The main risk identified by UBS was CoreWeave's high leverage, which is required to fund its expansion of AI computing capacity and could create greater pressure in a higher-rate environment. Other concerns include customer concentration, with three customers accounting for 72% of revenue, competition in AI compute hosting and bottlenecks that could delay new data centre construction. UBS nevertheless concluded that these risks were more than adequately reflected in CoreWeave's valuation at about three times expected 2027 revenue.