MW How CoreWeave's 'situationship' with Big Tech could cause a 30% stock drop

By Christine Ji

Bernstein analysts say CoreWeave's business could be cannibalized as Big Tech customers build their own data-center infrastructure

Bernstein projects that CoreWeave's $30 billion of capital expenditures will result in negative free cash flow of $23 billion.

Some of the biggest names in artificial intelligence are involved in what one analyst likens to relationship drama. CoreWeave could be a big loser, along with other neoclouds.

CoreWeave (CRWV) has made a name for itself as the biggest infrastructure provider of graphics processing units and a strategic partner of Nvidia (NVDA). But Bernstein analyst Madison Rezaei said the business model comes with fundamental risks, such as increasing competition from hyperscalers such as Microsoft $(MSFT)$ and Meta Platforms (META), which are major customers. There's also the potential that incremental deals dry up as data-center capacity eases.

"Hyperscalers are situationships, not spouses," Rezaei wrote in a Tuesday note, referencing a colloquial term for romantic entanglements lacking clear boundaries and formal commitment. CoreWeave "is meaningfully overvalued today." She has an underperform rating and $56 price target on the stock, implying she thinks shares could fall more than 30% from their current price of $84.41.

CoreWeave has grown aggressively in the last few years. It did $229 million in revenue in 2023 and $5.1 billion in 2025. Beyond renting out GPUs, the company also offers software services, such as cluster health management tools to monitor the health and productivity of GPUs. It's perhaps CoreWeave's "largest differentiation" from other neoclouds, according to Rezaei.

Read: Here's what CoreWeave's earnings need to show for the stock to soar further

Although Rezaei believes the company will lock down $35 billion in incremental new contracts through 2027, she points out that hyperscalers are building an incremental estimated 23 gigawatts of data-center capacity. CoreWeave and other neoclouds risk being treated as stopgap measures until that hyperscaler supply comes online by 2028. In other words, the hyperscalers might not view CoreWeave as a long-term partner.

"With a plethora of options, we do not believe hyperscalers will be incentivized to sign further large contracts" with CoreWeave, Rezaei wrote. "In fact, we believe hyperscalers are more likely to attempt head-on competition, going after GPU cloud business as the natural adjacency to traditional cloud," which could cannibalize CoreWeave's business.

CoreWeave's software offerings are unlikely to give the company a sustainable edge against "massively scaled software players" such as Microsoft (MSFT), Alphabet $(GOOGL)$ $(GOOG)$ and Amazon.com (AMZN), she added.

Today, CoreWeave has $66.8 billion in backlog, or committed contracts not yet billed. While the stock's current valuation implies $162 billion in backlog through 2030, Bernstein said backlog will be much lower, at $117 billion over the same period.

Combined with increasing competition in the cloud infrastructure space, CoreWeave's capital structure leaves little room for error. The company has made large upfront investments in data-center infrastructure, utilizing corporate bonds and private credit to lend against the value of its GPUs and contract revenue streams. "The problem with this model is that it does not regenerate if new contracts are being signed at scale," Rezaei said.

Bernstein models that CoreWeave will dole out $30 billion toward capital expenditures, resulting in $23 billion of negative free cash flow in 2026. The company will likely fund this spending through incremental debt issuance, according to Rezaei.

See more: Nebius's stock surges on its latest deal with a tech giant

-Christine Ji

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March 17, 2026 11:41 ET (15:41 GMT)

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