CoreWeave Downgraded by JPMorgan Amid Supply Chain Concerns
CoreWeave, a key infrastructure provider for artificial intelligence companies, saw its stock price tumble today after receiving a downgrade from JPMorgan due to escalating supply chain pressures.
The bank lowered its rating on CoreWeave to neutral from overweight and reduced its price target to $110 per share from $135, indicating just 4% upside potential. This follows the company’s third-quarter earnings release, where revenue exceeded expectations, but full-year guidance fell short of analyst forecasts. Shares of CoreWeave were down 10% in premarket trading. The company’s recent IPO in March has seen shares soar 164% prior to today’s news, reflecting the high demand for AI infrastructure.
Analyst Mark Murphy cited delays from a third-party data center developer as a primary concern, despite assurances from CoreWeave CEO Mike Intrator that the backlog would not be affected. “The new variable is supply chain pressures escalating to a point that they are impacting one specific third-party data center developer used by CoreWeave, which is running behind schedule and shifts some of CoreWeave’s revenue out of Q4,” Murphy wrote in a research note. This issue mirrors capacity constraints already reported by major hyperscalers like Microsoft Azure.
Despite the near-term challenges, Murphy remains optimistic about CoreWeave’s long-term prospects in the rapidly growing AI market. He noted the potential for a revenue rebound in the first or second quarter of next year, similar to what Microsoft Azure experienced earlier this year, but cautioned about the difficulty of forecasting supply chain equilibrium. You can learn more about the challenges facing the supply chain from Gartner’s research.
Company officials indicated they are working to mitigate the impact of the delays and expect to provide further updates on their next earnings call.
