CoreWeave (CRWV) Downgraded to Hold by BofA Despite AI Momentum

CoreWeave, Inc. (NASDAQ:CRWV) is one of the 10 AI Stocks Getting Wall Street’s Attention. On June 16, Bank of America analyst Bradley Sills downgraded the stock to “Hold” from Buy on valuation concerns, adjusting its price target upwards from $76 to $185. Sills noted that the stock has rallied 145% since its first-quarter earnings, trading at a premium valuation of 2027 EV/EBIT of 25x.

The analyst stated that “much of the near-term upside has been priced in,” and that the stock’s valuation is at a premium to peers. The firm is optimistic about CoreWeave’s offerings amid the ongoing AI boom.

Certain developments have also proven favourable for the stock, including a new hyperscaler customer, expansion of the OpenAI agreement worth $4 billion, remarkable top-line momentum, and a lower cost of capital for recently raised debt.

Coreweave’s (CRWV) Ascent Implies That with Great Data Comes Great Responsibility

Sills continues to see “solid sustained demand in CoreWeave‘s AI infrastructure market.” Even though the growth rate for capital expenditures related to artificial intelligence is surging, it remains “very healthy.”

AI infrastructure spending is estimated to reach $206 billion in 2027, a deceleration from the 65% jump observed in 2025. These estimates could move higher on a larger base. With OpenAI’s ChatGPT being the single largest consumer of AI workloads, Sills anticipates CoreWeave’s AI infrastructure market to witness continued growth.

However, elevated capital expenditure is likely to result in an estimated $21 billion of negative free cash flow through 2027. The company may have raised capital at a lower cost, but it represents only a small proportion of the overall incremental debt needed to support growth. This is why Sills is concerned about the cost of debt, as the company has funded 85% of its capex with debt in the past.

While we acknowledge the potential of CRWV as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you’re looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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Disclosure: None.