HSBC Maintains Reduce on CoreWeave (CRWV) Amid Margin Pressures, Debt Risks

CoreWeave Inc. (NASDAQ:CRWV) is one of the best data center stocks to buy now. On August 13, analysts from HSBC reiterated their Reduce rating on CoreWeave Inc. (NASDAQ:CRWV), keeping the price target at $32.

The analysts expressed caution over the company’s margin outlook, with its earnings projections sitting well below market consensus. While the Street expects CoreWeave Inc. (NASDAQ:CRWV) to expand adjusted EBITDA margins to around 70% by late 2025, HSBC analysts forecast a decline to just above 60% in the second half of the year, citing weaker utilization of data center assets. That is much weaker than the 62.6% the company reported in the Q2 2025.

HSBC Reiterates Reduce on CoreWeave (CRWV) Amid Margin Pressures, Debt Risks

A close-up of a network administrator’s hands working on a cloud computing server.

The analysts also questioned the likelihood of long-term margin recovery, pointing out that structural costs such as rent and power leave limited room for improvement. These costs currently account for over 20% of revenue.

In addition, the analysts pushed back on consensus assumptions around financing costs. Consensus assumes the company’s implied interest rate could decline to 8.1% by 2028 from 10.7% in the second quarter of 2025. HSBC described this assumption as too optimistic, suggesting that debt expenses will likely remain a heavier drag than investors expect.

CoreWeave Inc. (NASDAQ:CRWV) is an AI cloud-computing company that specializes in providing cloud-based graphics processing unit (GPU) infrastructure to artificial intelligence developers and enterprises.

While we acknowledge the potential of CRWV to grow, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an AI stock that is more promising than CRWV and that has 100x upside potential, check out our report about this cheapest AI stock.

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Disclosure: None. This article is originally published at Insider Monkey.