CoreWeave has had a wild ride since its initial public offering, buffeted by concerns about the sustainability of the artificial-intelligence boom. But at current prices it looks like a bargain, according to UBS.

CoreWeave stock was up 1.7% at $88.20 in early trading Wednesday, well below its May high of nearly $140.

UBS analyst Karl Keirstead thinks there's scope for a comeback, initiating coverage of the stock with a $120 price target and a Buy rating in a research note Tuesday. That implies a nearly 40% gain from current levels.

"A positive call on CoreWeave shares is a de facto call that investors will soon rotate back into the long-AI trade, a scenario that seems increasingly likely given the muted sentiment, strong demand signals and reported frontier lab growth," Keirstead wrote.

The central concern is how much CoreWeave must borrow to rapidly build data centers and expand its AI computing capacity.

CoreWeave is set to make capital expenditures of $260 billion in the period from 2027 through 2030 to reach its goal of eight gigawatts of data-center power capacity by the end of the decade, according to Keirstead. He estimates that will require about $102 billion in additional financing.

Keirstead argues that it's the creditworthiness of CoreWeave's clients that investors should be focused on and with customers like Nvidia, Microsoft, and Meta Platforms, that shouldn't be an issue.

With high-credit quality customers committed to long-date take-or-pay contracts then CoreWeave can keep driving down its rate of interest, with its latest debt carrying effective rates of 9% to 11%, down from almost 15% in 2023.

Keirstead said financing remains available for AI data centers, though borrowing costs have risen. He argued that CoreWeave could reduce its financing risk by requiring larger customer prepayments, securing financing from suppliers such as Nvidia, charging more per megawatt of capacity and taking on new contracts at a slower pace.

Valuing CoreWeave can be tricky as it is posting heavy quarterly losses but rapid revenue growth. Keirstead estimates that CoreWeave shares trade at roughly three times projected 2027 revenue and a little more than five times projected adjusted earnings before interest, taxes, depreciation and amortization. He sees that as a substantial discount to peers such as Nebius.

"In our view, these multiples are attractive for a company with 112% revenue growth facing material AI demand," Keirstead wrote.