Despite strong gains for the broader market, CoreWeave (NASDAQ: CRWV) stock closed out this week’s trading down by double digits. The artificial intelligence (AI) specialist’s share price fell 12.8% over the stretch. Meanwhile, the S&P 500 index rose 3.4%.
CoreWeave stock lost ground this week following fresh analyst coverage and news that Nvidia (NASDAQ: NVDA) is making a bigger push in the cloud computing space. The company’s valuation was also pressured by reports that a big acquisition move could be in the works.
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CoreWeave falls on analyst note and Nvidia news
Before the market opened on Wednesday, H.C. Wainwright published its first rating on CoreWeave. The investment firm set a neutral rating on the tech specialist’s stock, with analyst Kevin Dede raising some valuation concerns despite also acknowledging that CoreWeave had demonstrated its computing strengths.
The Wall Street Journal also published a report on Wednesday stating that Nvidia plans to ramp up its own cloud-computing business. Nvidia’s advanced graphics processing units (GPUs) have been the key hardware at the center of the AI data center revolution, but the tech leader is also in the relatively early stages of building its own AI-as-a-service (AIaaS) business. The company is a financial backer of CoreWeave, but some investors are worried that the tech giant could move in on the smaller player’s turf.
Investors are split on CoreWeave’s reported acquisition move
On Thursday, WSJ reported that CoreWeave is negotiating a deal to acquire Core Scientific (NASDAQ: CORZ). According to the report, a buyout could be finalized within weeks and is expected to assign a Core Scientific substantial valuation premium. Based on subsequent trading for CoreWeave, the reaction from investors appears to be mixed. Analysts are also split on what the buyout valuation might look like.
Jeffries put forward a lower-end target, estimating that CoreWeave could pay between $16 per share and $23 per share to purchase Core Scientific. Cantor Fitzgerald put the potential buyout price at above $30 per share, and Roth Capital expects the company could pay as much as $38 per share in an all-stock deal. Given that CoreWeave tried to acquire Core Scientific at a price of $5.75 per share last year, some investors may be worried that the company is at risk of overpaying in the potential buyout.
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Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nvidia. The Motley Fool has a disclosure policy.