Why BofA Is Betting on CoreWeave (CRWV) Even With Its ‘Inherent Risks’

TLDR

• Bank of America reinstated CoreWeave with a Buy rating and a $100 price target
• Analyst Tal Liani says the AI compute demand/supply imbalance won’t ease before 2029
• CoreWeave deploys new Nvidia chips in ~2.5 months vs. 4–6 months at hyperscalers
• Customer-turned-competitor risk is cushioned by multiyear, take-or-pay contracts
• CoreWeave is shifting to debt financing backed by revenue from investment-grade customers

CoreWeave stock gained 1.7% on Tuesday after Bank of America reinstated coverage with a Buy rating and a $100 price target. The stock closed at $83.37 and had already climbed 14% this year heading into Monday’s close.

CoreWeave, Inc. Class A Common Stock, CRWV

Analyst Tal Liani led the call, pointing to CoreWeave’s position in the fast-growing AI infrastructure-as-a-service market, which he pegs at $79 billion.

Liani said the company benefits from continued demand for compute power, its software tailored to AI workloads, and its partnerships with Nvidia and OpenAI.

BofA acknowledged the investment comes with what it called “inherent risks,” but said those risks don’t outweigh the opportunity.

One key edge CoreWeave holds is speed. The company can deploy new Nvidia chips in about 2.5 months on average. That compares to four to six months at larger, more diversified hyperscalers, according to BofA.

That speed matters a lot right now. AI labs are hungry for compute, and CoreWeave has been able to feed that demand faster than traditional cloud providers.

Competitor Risk Is Real, But Not Immediate

One concern hanging over CoreWeave is that some of its biggest customers — including Meta Platforms — are building their own data centers. That puts them on a path to competing directly with CoreWeave for infrastructure capacity.

It’s a tricky dynamic. These same large clients make up a major portion of CoreWeave’s revenue, so losing them down the road would sting.

BofA said this risk isn’t an immediate threat. Customers sign multiyear, take-or-pay contracts, which lock in revenue while CoreWeave builds out its capacity and broadens its customer base.

Debt Financing Under the Microscope

CoreWeave’s financing model has already drawn scrutiny from the market. The company takes on debt to add new compute capacity, framing it as “success-based” spending tied to customer contracts.

To reduce the risk here, CoreWeave is shifting toward debt structures explicitly backed by revenue streams from investment-grade customers and the underlying hardware. This moves some of the credit risk onto the customers themselves.

BofA says that if CoreWeave can keep bringing capacity online quickly enough, it can pull off “hyperscale-style expansion without hyperscale balance-sheet strength.”

The risk remains that any delays in building or repurposing facilities could weigh on the stock.

Liani also flagged that the rise of agentic AI could further boost infrastructure demand, potentially keeping supply tight for longer than currently expected.

BofA does not expect the demand/supply imbalance in AI compute to ease before 2029.

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