CoreWeave (CRWV) had a rough Wednesday, with shares tumbling nearly 14% after a report that Meta Platforms (META) is exploring an expansion into AI computing services. The news sent a chill through the neocloud sector, dragging down peers like Nebius Group (NBIS), which fell 17% on the day.
The logic is straightforward: if Meta starts offering AI computing capacity to third parties, it could become a direct competitor to companies like CoreWeave that specialize in renting out GPU clusters. But not everyone on Wall Street is hitting the panic button.
Rosenblatt Says Buy the Dip
Rosenblatt analyst John McPeake came out swinging in defense of CoreWeave. He said his firm's checks show no change in demand for GPU computing capacity from large cloud companies — shortages are still common across the industry. More importantly, he noted that Meta likely does not have the right to resell any capacity it has leased from CoreWeave through 2032 to third parties. That means CoreWeave's existing contracts with Meta are probably safe.
McPeake called the weakness a buying opportunity and reiterated a Buy rating with a $250 price target. That's nearly three times the current price of around $85.
Evercore ISI's Mark Mahaney offered a slightly different take on CNBC. He estimated Meta could generate $10 billion to $20 billion in incremental annual revenue by selling excess AI computing capacity. But he doesn't see Meta going head-to-head with Amazon's (AMZN) AWS or Microsoft's (MSFT) Azure. Instead, he thinks the company is targeting the emerging neocloud market — the same space CoreWeave operates in. If Meta succeeds, it could leverage its massive scale to undercut specialized providers while turning its already-built AI infrastructure into a lucrative new revenue stream.
The Technical Picture Is Ugly
CoreWeave's stock chart isn't pretty. Shares closed Wednesday at $85.45, well below all major moving averages. The stock is down 43.5% over the past 12 months and trades 17% below its 20-day simple moving average, 21.7% below its 50-day SMA, 13.7% below its 100-day SMA, and 14.7% below its 200-day SMA.
The 20-day SMA is below the 50-day SMA — a bearish signal that suggests persistent selling pressure. Although the stock formed a golden cross in May (the 50-day SMA crossed above the 200-day SMA), shares have since fallen below both averages, limiting the bullish signal's impact.
Momentum indicators are also weak. The MACD is below its signal line, and the histogram is negative, indicating that upside momentum has faded. On the upside, $88.50 is the first key resistance level. Support sits near $70.50, close to the lower end of the stock's 52-week range.
What's Next for CoreWeave?
CoreWeave shares were down another 0.28% in premarket trading Thursday, at $85.45. The stock is clearly under pressure, but the Rosenblatt call suggests that at least some analysts see the sell-off as an overreaction. Whether Meta actually becomes a serious competitor remains to be seen, but for now, the demand for AI computing capacity shows no signs of slowing down.
