CoreWeave is broadening its customer base and benefiting from upbeat pricing dynamics, analysts say

Wall Street is reacting positively to CoreWeave's latest earnings report.

As CoreWeave Holdings shares soar on Wednesday, even one of the most vocal bears is willing to give the neocloud company some praise.

"We've previously written about how this team has fallen down on execution, but in this quarter, they delivered," wrote Bernstein analyst Madison Rezaei, who called the earnings report the strongest in CoreWeave's (CRWV) history.

Among the highlights for Wall Street analysts: a swelling backlog, growing customer diversification and rising prices.

"We even like the Indonesia build plan," Rezaei wrote, referring to the company's work to secure power in the Asia-Pacific region.

CoreWeave's stock was up almost 19% in premarket action on Wednesday.

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Rosenblatt Securities analyst John McPeake wrote that with artificial-intelligence computing power being so scarce, he expected that CoreWeave would be able to capitalize. He saw evidence of that through the company's pricing commentary, noting that "capacity continues to be sold out, they took price up 25% in July" and CoreWeave has even been able to sign a recent agreement around a years-old Nvidia chip at an "attractive price."

The company flagged customer interest in that Nvidia A100 chip, which is part of a line that was introduced in 2020 and now is the center of a deal running through 2029.

"That is a nine-year commercial life on silicon the market writes off after five, and prior-generation pricing is at or above year-ago levels," wrote McPeake, who gave the stock a buy rating with a $250 target price. "We think it addresses the residual-value question underneath every neocloud bear case."

Seaport Research's Jay Goldberg said that CoreWeave seems to be moving in the "right direction."

"CoreWeave showed good signs of improving profitability," he wrote. "The company says it is seeing margins inflecting, demand strengthening and increased diversification of its customer base."

Goldberg said, however, that CoreWeave still has work to do as far as building a sustainable business for the long haul.

"While we are encouraged by the company's improved execution and budding operating leverage, we think the true value of the company is still very much in flux," he said in his report. "Over the very long term, the company will need to build a strong book of business beyond its current major customers."

He rates the stock at neutral.

And though Bernstein's Rezaei wrote positively about the recent results, she didn't budge from her underperform stance in her note that was titled: "Credit where credit is due... until the credit is actually due."

She expressed worries about the company's debt levels, balance sheet and whether CoreWeave will be able to thrive as computing capacity becomes more readily available.

"As capacity eases, which we anticipate, this company will be among the first and hardest hit," she wrote.

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-Emily Bary