On Monday, cloud computing firms CoreWeave, Inc. (CRWV.US) and NEBIUS (NBIS.US) received initial "Neutral" ratings from investment bank D.A. Davidson. Analyst Gil Luria noted in a client report that Davidson's stance on CRWV has previously swung between extremes, and the current moment presents an ideal opportunity for a balanced perspective.

Luria stated, "On one hand, we remain optimistic about the prospects of the compute provisioning industry and believe CoreWeave has positioned itself as a key player. On the other hand, given its margin profile and significant reliance on debt financing, we maintain skepticism regarding CoreWeave's ability to generate sufficient returns. Additionally, we would prefer to see reduced insider stock sales."

Alongside the "Neutral" rating, Luria also lowered the price target for CoreWeave from $175 to $100.

The situation for NEBIUS is somewhat different. Luria indicated that the company deserves a "premium valuation," but the stock may need a pause in the near term. "Since our initial coverage over a year ago, Nebius's stock has significantly outperformed the market. NBIS has rightfully transitioned from being largely overlooked to a core holding in the AI trade," Luria added. "We believe the stock warrants its current premium valuation but also think this may limit its near-term upside potential. Therefore, we are opting to step back, assigning a 'Neutral' rating with a $250 price target as we continue our coverage."