CoreWeave's NVIDIA Boost Fueled a Rally-Now Comes the Hard Part

Shares of tech giant CoreWeave Inc. (NASDAQ: CRWV) are trading just under $110 after a solid start to the year. The stock is up nearly 70% since before Christmas and has added another 17% this week alone, following this week’s announcement of NVIDIA Corp’s (NASDAQ: NVDA) $2 billion investment to support the build-out of more than five gigawatts of AI infrastructure.

At first glance, that headline looks like a no-brainer win. But dig a little deeper, and it becomes clear why opinion is split. Some analysts see the deal as overdue validation of CoreWeave’s strategic importance in the AI stack, while others view it as a warning sign about financial fragility and overreliance on a single patron. With the stock already running hot, how investors interpret this split could shape where CoreWeave trades through the rest of the quarter.

The Bear Case: NVIDIA’s Investment Doesn’t Remove CoreWeave’s Risks

The cautious camp wasn’t slow about responding to the NVIDIA news. Analysts at firms such as Macquarie, Mizuho, and Needham all reiterated Neutral or equivalent ratings, arguing that the investment does not fundamentally change the risk profile. The core concern centers around how this looks less like an investment and more like a shot in the arm. 

From their perspective, NVIDIA stepping in highlights how constrained CoreWeave’s funding options have become. The company was already paying more than $300 million per quarter in interest, a figure that represents over 20% of revenue. Receiving equity-based financing like this suggests that dipping back into the debt markets is no longer an option right now. 

There is also unease around vendor lock-in. By tying itself so closely to NVIDIA at a time when NVIDIA’s own prospects are being closely watched, CoreWeave increases its exposure to shifts in its patrons’ competitive position. In other words, were NVIDIA to sneeze, then CoreWeave could easily catch a cold.  

The Bull Case: Strategic Validation and Upside Potential

On the other side of the argument, however, the bulls see the investment as a clear vote of confidence and validation of CoreWeave’s potential. Analysts at Deutsche Bank, for example, immediately upgraded the stock from Hold to Buy following the announcement and lifted their price target up to $140, implying roughly 30% upside from current levels.

They argue that NVIDIA would not commit capital at this scale without strong visibility into future demand. Rather than signaling weakness, the deal could be interpreted as strategic alignment—securing supply, accelerating deployment, and ensuring that CoreWeave remains a key infrastructure partner as AI workloads continue to scale.

There is also the stock's ongoing momentum to consider. CoreWeave’s shares had already been enjoying a strong rally in the weeks before the announcement, indicating a strong demand from Wall Street to get in position ahead of further gains. The 17% pop in the stock this week alone reinforces the argument that this has been seen as a fresh bullish catalyst, rather than a bailout.

What to Expect Heading Into February

Still, looking ahead into the coming months, CoreWeave needs to make sure it takes care of business. Near-term execution is going to matter more than most, and the company needs to show that it can translate this backing into disciplined growth, particularly when it comes to managing cash flow and reducing the drag from financing costs.

The bulls will have been pleased to see the stock’s jump this week, as it shows enthusiasm is running hot, but momentum indicators are starting to look stretched. For this rally to be sustainable, shares need to ideally see some consolidation ahead of their next earnings report in mid-February. An unchecked move up to then would increase the risk of some sharp volatility around the release, and would heap pressure on the business to deliver a near-perfect report. 

It helps, however, that broader market conditions are firmly in risk-on mode, with the benchmark S&P 500 index notching a fresh record high this week. In that kind of environment, investors are more willing to lean into growth stories like the one developing at CoreWeave. While the bears raise some valid concerns, the current backdrop clearly favors upside if the business can execute well.

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The article "CoreWeave’s NVIDIA Boost Fueled a Rally—Now Comes the Hard Part" first appeared on MarketBeat.