CoreWeave (NASDAQ:CRWV) shares advanced by 2.4% in premarket trading after Cantor Fitzgerald initiated coverage of the technology firm with an Overweight rating and set a price target of $116.

The analysts explained their rating was based on the promising balance between a substantial opportunity in the artificial intelligence (AI) market and ongoing execution risks. "We believe CoreWeave is positioned to leverage secular growth trends in AI, particularly in large language model (LLM) training and inference-based applications as a software-enabled hyperscaler focused on AI. Additionally, we are comfortable with near-term demand and supply dynamics as well as the company's competitive edge," they commented in a client note.

CoreWeave's revenue and backlog mainly stem from AI model training, but analysts suggested inferencing could become a major growth driver.

The note also highlighted Nvidia (NASDAQ:NVDA) as a pivotal partner for CoreWeave. CoreWeave operates entirely on Nvidia GPUs, with Nvidia holding a 5.1% ownership stake post-IPO and having recently acquired more shares. Nvidia is also a significant revenue contributor for CoreWeave—estimated to account for a mid-teen percentage of CoreWeave's revenue in 2024 and a mid-single-digit percentage in 2025. Nvidia has projected a $1 trillion installed base for accelerated computing platforms, such as GPUs, alongside a $1 trillion opportunity in AI factories, platforms built on GPUs to facilitate AI model development, deployment, and maintenance. The analysts believe CoreWeave could gain from these expansive opportunities as it develops its AI-centric infrastructure to support broader workloads and use cases over the long term.