CoreWeave Inc. (CRWV) shares dropped over 12% on Wednesday. Bernstein analyst Madison Rezaei warned that Meta's (META) planned cloud computing business could intensify competition for the neocloud provider. The analyst noted Meta's potential cloud infrastructure plans have created volatility across neocloud and hardware companies, following a Bloomberg report on Meta's intention to monetize its AI infrastructure. Bernstein maintains an 'Underperform' rating on CoreWeave with a $67 price target, stating competition will intensify and the company's business model will become unsustainable over time.
Bernstein Issues Underperform Rating On CoreWeave Stocks
Bernstein analyst Madison Rezaei flagged that Meta's potential cloud infrastructure business plans have created volatility across neocloud and hardware companies, according to TheFly. The firm stated that Meta's plan to develop an externally facing cloud infrastructure business to compete with Amazon's (AMZN) AWS, Microsoft's (MSFT) Azure, and GCP could be problematic for CoreWeave. Bernstein assigned an 'Underperform' rating on CoreWeave with a price target of $67 on the stock.
Meta Plans To Monetize AI Infrastructure Through Cloud Services
According to a Bloomberg report, Meta is planning to generate new revenue streams from the AI infrastructure it has been building for its products. The company will offer developers access to Meta-hosted AI models, similar to Amazon's Bedrock service, and rent out raw computing capacity from its data centers and chips. This move is part of the Meta Compute initiative. In May, Mark Zuckerberg commented that a cloud computing business was 'definitely on the table', hinting the company could eventually monetize excess computing capacity or provide paid AI services.
CoreWeave Extends Meta Agreement For $21 Billion Through 2032
In April, CoreWeave announced an extension of its agreement with Meta, under which the company would provide AI cloud capacity to Meta through December 2032 for about $21 billion. The capacity will support Meta's AI deployment and development efforts and will be distributed across multiple locations to optimize scalability, resilience and performance for Meta's AI operations.
Nebius Secures $27 Billion AI Infrastructure Deal With Meta
Nebius announced a deal with Meta for AI-infrastructure supply spanning over five years. Per the agreement, Nebius will supply $12 billion of dedicated capacity across multiple locations, based on one of the first large-scale deployments of the NVIDIA Vera Rubin platform. The company stated it would start delivering this capacity in early 2027. Meta has agreed to buy additional available compute capacity across certain scheduled Nebius clusters up to $15 billion over a five-year period. Nebius will sell this capacity to third-party customers of its AI cloud business, and Meta will buy the remaining capacity. The deal has a contract value of up to about $27 billion.
Retail Sentiment On CoreWeave Stocks Shifts To Bullish
On Stocktwits, retail sentiment surrounding CoreWeave stock has improved to 'bullish' from 'bearish' while message volumes increased to 'high' from 'low' over the past 24 hours. CRWV stock has risen over 8% year-to-date, and NBIS stock has gained over 162% year-to-date.
FAQ
What caused CoreWeave stocks to drop on Wednesday?
CoreWeave stocks dropped over 12% on Wednesday after Bernstein analyst Madison Rezaei warned that Meta's planned external cloud computing business could intensify competition for the neocloud provider, creating volatility across the sector.
What is Bernstein's rating on CoreWeave stocks?
Bernstein has an 'Underperform' rating on CoreWeave with a price target of $67, stating that competition will intensify over time and the company's business model will become unsustainable.
How much is CoreWeave's agreement with Meta worth?
In April, CoreWeave extended its agreement with Meta to provide AI cloud capacity through December 2032 for about $21 billion to support Meta's AI deployment and development efforts.
