Buy this cloud infrastructure stock as it leans into short-term contracts, JPMorgan says
CoreWeave is likely to benefit from embracing short-term contracts, allaying fears over its outsized investments and boosting the stock, the bank says.
TL;DR
- JPMorgan upgraded CoreWeave to overweight from neutral, raising its 12-month price target to $125.
- The upgrade is driven by favorable pricing for compute due to strong demand and CoreWeave's use of short-term contracts at premium pricing.
- Concerns about capital expenditures for AI have led to a 13% drop in CoreWeave's stock in Q3, despite strong first-half performance.
- JPMorgan believes these investments will translate to financial gains, especially with shorter-term business agreements.
- The bank notes expanded flexibility in addressing capacity needs through shorter-term contracts, reflecting lender confidence in demand for GPUs.