By CoreWeave, a leading infrastructure provider for artificial intelligence firms, faced a setback this week after JPMorgan downgraded the stock, citing near-term supply chain pressures that could limit further gains.
The investment bank cut its rating on CoreWeave to neutral from overweight and trimmed its price target to $110 per share from $135, signaling a modest 4% potential upside.
The downgrade followed CoreWeave’s third-quarter earnings release, which showed stronger-than-expected revenue for the period but disappointing full-year guidance.
The company’s forecast fell short of Wall Street expectations, prompting investors to react sharply.
Shares of CoreWeave dropped about 8% in premarket trading following the report.
Despite the pullback, the stock remains up an impressive 164% since its public debut in March.
Analyst flags data center delays and supply constraints
In his note to clients, JPMorgan analyst Mark Murphy pointed to mounting supply chain pressures as a key reason for the downgrade.
He highlighted a delay involving one of CoreWeave’s third-party data center developers, which is running behind schedule.
Although CoreWeave’s CEO Mike Intrator assured investors that the delay would not impact the company’s backlog, Murphy expressed doubts about the timeline and potential ripple effects on near-term revenue.
“The new variable is supply chain pressures escalating to a point that they are impacting one specific third-party data center developer used by CoreWeave,” Murphy wrote.
“This is running behind schedule and shifts some of CoreWeave’s revenue out of Q4.”
Murphy added that CoreWeave’s supply issues reflect a broader industry challenge.
Major hyperscalers—large cloud service providers—have also been forced to temper their revenue expectations due to similar capacity constraints.
He noted that the phenomenon is now affecting CoreWeave, a company previously recognized for its strong execution and consistent on-time delivery of AI data centers.
Long-term AI growth story remains intact
Despite the downgrade, JPMorgan’s overall stance on CoreWeave’s long-term prospects remains positive.
Murphy emphasized that the firm still sees “tremendous” opportunity for CoreWeave as artificial intelligence adoption accelerates globally.
“Our view of CoreWeave’s longer-term opportunity remains unchanged,” Murphy wrote, adding that the company’s revenue ramp could recover as early as the first or second quarter of next year.
He drew comparisons to Microsoft’s Azure cloud division, which experienced a notable surge in revenue in recent quarters after overcoming similar constraints.
However, Murphy cautioned that predicting the timing of recovery remains difficult given the “unprecedented and mounting industry-wide pressures across supply chains.”
He noted that it may take time for the various logistical and production challenges affecting the AI infrastructure sector to stabilize.
While the near-term headwinds could dampen investor enthusiasm, CoreWeave’s position in the AI infrastructure market and its past track record of execution continue to underpin confidence in its longer-term growth potential.
For now, JPMorgan’s downgrade signals a period of recalibration for investors who have ridden CoreWeave’s remarkable post-IPO surge.
The firm’s ability to navigate supply disruptions and keep pace with AI demand will likely determine whether the company can maintain its high-growth trajectory heading into 2025.
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