Barclays downgrades CoreWeave after massive stock rally

On May 26, 2025, Barclays announced it would downgrade CoreWeave from an overweight rating to equal weight after the stock experienced significant gains. The downgrade follows this AI cloud computing company’s impressive performance since its initial public offering (IPO) on March 28, 2025, when shares were priced at $40. In May alone, CoreWeave's stock surged by a remarkable 148%, indicating strong market interest and momentum. Despite the positive performance, Barclays raised CoreWeave's price target from $70 to $100 per share, which represents only a modest upside of about 3%. Analyst Raimo Lenschow noted that while he holds a favorable long-term outlook on CoreWeave, he perceives limited short-term upward potential due to the company's current valuation. Analysts' expectations suggest that CoreWeave, trading at a high EV/EBIT multiple, is experiencing a healthy premium compared to its peers. The company has gained attention for its growth prospects, especially in the AI sector, where it is seen as a pioneering entity focused on general artificial intelligence (GenAI). It showcases itself as one of the leading firms providing essential infrastructure for GenAI applications and has shown impressive revenue growth, with a notable 420% annual growth reported in Q1 2025. Barclays is the first to initiate a downgrade in what has been a positive reception for CoreWeave among Wall Street analysts, following a wave of bullish endorsements from firms such as JPMorgan and Bank of America just last month. The downgrading reflects a cautious approach given the company's rapid stock appreciation, and analysts, including Lenschow, are keeping an eye on the valuation relative to potential future catalysts and market conditions.