Why DA Davidson upgraded CoreWeave, lifting shares

CoreWeave shares were rising early Monday after a known critic of the company upgraded the stock and raised its price target, citing an OpenAI fundraise would also benefit the cloud-tech company.

DA Davidson analyst Gil Luria upgraded CoreWeave to Neutral from Underperform and raised his price target to $68 from $36, triggering a rise of more than 4% in the stock.

The move drew attention partly because CoreWeave was already trading well above that level, changing hands at $79.32.

Upgrade driven by OpenAI funding prospects

Luria said his reassessment was linked to reports that OpenAI could pursue a fundraising round of up to $100 billion, a deal that, if completed, would improve visibility around CoreWeave’s large contracts with the AI developer.

“It shouldn’t be a foregone conclusion that OpenAI successfully completes its reported $100 billion potential fundraise, but if it does so, it would be able to fulfill all its commitments in 2026, including to CoreWeave,” Luria said in a note to clients.

CoreWeave signed a five-year contract worth $11.9 billion with OpenAI in March 2025 to provide cloud computing services, a deal that has been central to investor expectations for future revenue growth.

Despite the upgrade, Luria stressed that his fundamental concerns about the business had not disappeared.

He said that while a successful OpenAI fundraise could delay pressure on CoreWeave, it would not resolve deeper structural issues.

“While this would not change the value destruction inherent in CRWV’s business, it would kick the can down the road for the inevitable reckoning,” he said.

Debt concerns remain front and centre

Luria has been one of the most outspoken critics of CoreWeave, arguing that its model of taking on significant debt to build AI infrastructure for clients such as Microsoft and Nvidia is unsustainable.

He reiterated that view on Monday, warning that equity investors could still face heavy losses.

“We continue to believe that the equity in shares of CRWV may ultimately lose all its value since the entire value of the enterprise is owned by debt holders,” he said.

The analyst added that there was still a risk that a large portion of CoreWeave’s backlog may not be realised.

If OpenAI’s fundraising effort falls well short of the reported $100 billion target by the end of March, he warned, there could be “an acceleration of the collapse in the value of CRWV shares”.

Luria has previously said CoreWeave appears to be generating a return on capital of about 4%, well below an estimated cost of capital of 9%.

Broader analyst views

CoreWeave has countered such criticism by saying its contracts are designed to deliver risk-adjusted returns above its cost of capital and typically include fixed payments regardless of utilisation.

Other analysts expect margins to improve and borrowing costs to fall over time.

According to LSEG-compiled data, 17 of the 32 brokerages covering the stock rate it a buy or higher, while 13 recommend hold and two advise selling.

The median price target stands at $125.38.

The company went public in March in one of the most closely watched technology listings of the year, but its shares have been volatile as investors debate whether enthusiasm around artificial intelligence is becoming overheated.

Sentiment improved last month after CoreWeave was named as one of 24 partners in the US Department of Energy’s Genesis Mission, which aims to use AI to accelerate scientific discovery.

The stock also benefited from a bullish note last month by Citi Research analyst Tyler Radke, who resumed coverage after a restricted period.

Radke said management commentary suggested capacity expansion and bookings momentum were continuing into the fourth quarter, setting the stage for faster growth in 2026, even as the company works through supply constraints and power-related delays.

Citi has a $135 price target on the stock.

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