Story
JPMorgan Upgrades CoreWeave to Overweight on Stronger Compute Pricing, Margin Expansion
Summary
JPMorgan upgraded CoreWeave to Overweight from Neutral and raised its price target to $125, citing higher prices for computing power and expanding profit margins that are expected to outweigh capital expenditure concerns.
JPMorgan has upgraded CoreWeave (NASDAQ: CRWV) to Overweight from Neutral, citing stronger pricing for its computing power and an expansion in profit margins. The bank also raised its price target on the cloud infrastructure provider, expressing confidence that higher revenue will more than offset the costs of its capacity expansion.
Rationale for the Upgrade
In a note to investors Thursday, JPMorgan analyst Samik Chatterjee highlighted strengthening demand for computing power that is allowing CoreWeave to command higher prices. The bank pointed to 25% price increases across some of CoreWeave's products in July and frequent price hikes at a competitor as evidence of a favorable market environment.
CoreWeave management recently stated that contracts signed in its fiscal third quarter came in at approximately $40 million per megawatt. According to the company, this stronger pricing is adding 5 to 10 percentage points to contribution margins on new deals, which JPMorgan said dispels "any concerns that the higher price is purely a pass-through of higher costs."
Margins Seen Outweighing Capex Concerns
JPMorgan's analysis addresses a key investor concern: the significant capital expenditure required for CoreWeave to build out its capacity. The firm acknowledged these worries but believes the positive financial impact of higher prices will be more significant.
Chatterjee wrote that "the raise in pricing and margins will overwhelm the increase in debt to fund the capex build." The bank expects this dynamic to create "robust upsides to the equity valuation."
AdNew Price Target and Outlook
JPMorgan raised its December 2027 price target on CoreWeave shares to $125 from a previous $120. The new target implies a potential upside of 42% from the stock's recent trading level.
The note observed that CoreWeave's shares have traded in a narrow range this year, despite the company consistently raising its 2026 outlook. Key growth metrics highlighted by the bank include:
- Contracted power has increased from 3.1 gigawatts at the end of 2025 to 4.2 gigawatts as of August 11.
The updated valuation also accounts for potential share dilution from CoreWeave's recently announced at-the-market (ATM) stock offering.
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