The high degree of unpredictability for artificial intelligence cloud company CoreWeave won’t be tolerated by many on Wall Street, according to JPMorgan. “There could be a wide range of outcomes for CoreWeave,” analyst Mark Murphy wrote on Tuesday. “For this reason, we expect the stock to provide a wild, lumpy, volatile ride, requiring a risk tolerance that may not exist for most investors.” “If we end up with heightened economic volatility, CRWV shares would probably suffer disproportionately due to risk-off positioning,” the analyst continued. “However, our sense is that investors are pricing in the glass-half-empty view more than the other view, represented by a 16x EV/CY26E PF EBIT multiple for a company projected to grow 140% in the expansive AI market.” Murphy thinks that investors who haven’t spent much time with CoreWeave’s team are not likely to fully appreciate the speed with which the team move and the company’s motivation to solve engineering problems for its customers. Moving forward, the analyst said that investors should “ascribe a material growth-adjusted valuation discount on CRWV shares to reflect its rare level of customer concentration,” as CoreWeave has had only a handful of customers driving a large portion of its revenue. Notably, the company’s top customer, Microsoft , accounted for 62% of its revenue in 2024, and its top two customers made up 77% of its revenue last year, Murphy said. He added that by contrast, the average software company at time of its IPO has thousands of customers, with no single customer driving more than 5% of its revenue. “This meaningfully shifts the risk profile and volatility of bookings higher for CoreWeave; its business model is more akin to that of Boeing , Palantir , or Northrop Grumman (unavoidable customer concentration with airlines and government agencies) – only a handful of AI companies can conceivably sign multi-billion-dollar contracts with CoreWeave, and we expect CoreWeave to be living with this reality for quite a while,” the analyst also wrote. CRWV 1D mountain CRWV, 1-day Shares of the Nvidia-backed name gained more than 7% in midday trading Tuesday after several analysts, including Murphy, initiated coverage with a buy or overweight equivalent rating. Murphy’s $43 price target implies more than 21% upside from Monday’s close. Tuesday’s move higher puts the stock’s gains this month at more than 2%, outpacing the broader market. However, in the past one week, shares have fallen nearly 7%. This comes after the stock advanced nearly 42% and topped the $40 per share price of its initial public offering – on which JPMorgan was one of the lead underwriters – in the first trading day of April, just two sessions after it closed flat in a disappointing Nasdaq debut .
