Piper Sandler Initiates on CoreWeave as Top Pick in AI Infrastructure Build-Out

Piper Sandler has initiated coverage on specialized cloud provider CoreWeave (CRWV), designating it a top pick with an Overweight rating and a $151 price target. The investment bank's analysis frames CoreWeave as a primary beneficiary of what it calls "Megawatt Mania," a massive build-out of artificial intelligence infrastructure.

The 'Megawatt Mania' Thesis

In a new research note to clients, Piper Sandler analyst James Fish outlined a highly favorable view of the AI-compute sector. The firm projects the market will grow at a 56% compound annual rate to reach $109 billion by 2029, forecasting that demand will outstrip supply for several years.

According to the note, so-called "neoclouds" like CoreWeave are positioned to capture significant market share from traditional hyperscalers. Piper Sandler's model predicts total AI compute will expand sixfold in the coming years, with CoreWeave poised to capture 12% of global megawatts by 2028.

CoreWeave's Differentiated Position

Piper Sandler highlighted CoreWeave's superior risk-reward profile, citing its software and financing arrangements as key advantages. The firm pointed to the company's proprietary software orchestration stack, SUNK, as a key differentiator that helps reduce costs and enables multi-cloud deployments.

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Like other specialized providers, CoreWeave leverages deep ties with Nvidia and custom architectures to offer pricing that is over 40% lower than traditional cloud giants. The analyst note also suggests the market misunderstands CoreWeave's debt risk, which is mitigated by long-duration Master Services Agreements (MSAs) and strategic financing.

Cautious Outlook on Rival Nebius

In the same report, Piper Sandler initiated coverage on rival Nebius Group (NBIS) with a Neutral rating and a $224 price target. While acknowledging Nebius's differentiated technology, including an asset-light model and custom server designs, the firm pointed to near-term risks.

The cautious stance stems from uncertainty surrounding estimates, particularly related to the company's Vineland data center. These execution risks led the firm to prefer CoreWeave on a risk-adjusted basis.