CoreWeave stock falls 3%, why this analyst sees 88% upside for the stock

CoreWeave CRWV shares fell nearly 3% in premarket trading Monday as technology stocks came under pressure from rising global bond yields.

The 30-year US Treasury yield topped 5.3% last week, reaching levels not seen in nearly 20 years, while yields in Japan, France and Germany also climbed to multi-year highs.

Despite the broader pressure on technology stocks, Truist Securities remains bullish on CoreWeave, arguing that the company's pricing power can offset higher graphics processing unit (GPU) costs.

Truist raises CoreWeave price target

Truist Securities maintained a Buy rating on CoreWeave and raised its price target to $165 from $155. The new target implies nearly 88% upside from Friday's closing price.

Analyst Arvind Ramnani said CoreWeave's pricing power should more than offset rising GPU costs.

He expects higher prices charged by the company to largely flow through to margins in the second half of 2026, while Nvidia's higher costs are expected to affect systems shipped early next year.

Ramnani also estimated that contribution margins on future longer-duration contracts could rise from about 24% to 33%. Shorter-duration contracts and the re-contracting of previous-generation GPUs could provide additional upside, he said.

CoreWeave rents computing capacity using GPUs from Nvidia and other chipmakers.

Rising demand for memory and storage solutions linked to the artificial intelligence boom has pushed GPU prices higher.

Nvidia has reportedly raised prices for its latest GPUs by more than 15%, creating a potential margin challenge for CoreWeave. However, the company increased prices across its inventory by 25% in July, according to Ramnani, helping offset higher equipment costs.

CoreWeave benefits from AI infrastructure demand

Truist expects limited risk to CoreWeave's existing contracts and continues to view the market as supply-constrained.

The bank's bullish outlook is broadly consistent with Wall Street sentiment. LSEG data shows that 27 of the 40 analysts covering CoreWeave have a Buy or Strong Buy rating.

CoreWeave shares have gained 23% in 2026, although the stock has experienced significant volatility. Shares rose 39% during the first half of the year before falling 28% in July.

The company operates in the growing neocloud industry, which provides computing capacity to customers benefiting from the continued build-out of artificial intelligence infrastructure.

Neocloud providers have benefited from substantial spending by large technology companies and hyperscalers.

However, the industry's rapid expansion has also raised concerns about whether the companies can generate adequate returns on their investments.

Rising capital spending raises concerns

Noah Weisberger, chief strategist at BCA Research, has taken a more cautious view of the neocloud industry.

He argues that companies in the sector could "destroy capital" by using borrowed money to expand what could eventually become a low-margin commodity service.

In a recent research report, Weisberger and colleague Dishaan Pandey analyzed six neocloud companies and found that their heavy capital spending could result in significantly lower returns on invested capital than hyperscalers achieve from their own infrastructure investments.

Weisberger said neocloud companies benefit from spending elsewhere in the technology supply chain, but they also have to invest heavily to generate that revenue.