The artificial intelligence-focused data center operator CoreWeave Inc.’s stock continued to rise on Wednesday, illustrating how a number of variables render the recently listed company vulnerable to erratic fluctuations.
After closing at $40 on Friday, CoreWeave’s stock (CRWV) is now up 65% after rising 17% on Wednesday. In what was perceived as a disappointing transaction, the Friday close was equal to the company’s IPO price.
The key causes of CoreWeave’s volatility, according to Santosh Rao, head of research at Manhattan Venture Partners, are the company’s lower stock float, the possibility of a short squeeze, and conjecture on the potential effects of tariffs on the whole market. However, he acknowledged that some people would still question if “AI has run its course.”
Rao is more optimistic about the need for AI computer power in general. “I believe the fundamental demand for high-performance chips remains and CoreWeave is well positioned to benefit,” he wrote in his email. The secondary market for tech businesses supported by private ventures is the area of expertise for Manhattan Venture Partners, a primary investor and advisor.
For several weeks, the numerous investment banks who served as underwriters for the CoreWeave sale will not be providing any coverage of the business. The only analyst to start covering CoreWeave last week with a neutral rating was Gil Luria of D.A. Davidson. However, citing increased concerns about the company’s high debt levels and other challenges, he reduced his price estimate from $47 to $36 on Monday.
According to Luria, he had gotten a lot of response on his initiation report from investors. He stated that although he and his group are adamant that artificial intelligence (AI) is a game-changing technology that would boost economic productivity, they feel that this should “allow us not to recommend every participant in the AI ecosystem, but rather try to be more selective.”
He believes that CoreWeave appears to be a special-purpose vehicle for Nvidia – “an off-balance-sheet arrangement to amplify [a] $350 million investment into a $10 billion customer,” Luria wrote, adding that the news that Nvidia Corp. (NVDA) reportedly invested $250 million to help support CoreWeave’s stock at the time of the IPO supported his opinion.
Luria also brought up the float as a contributing element to the volatility of the stock. In an email to MarketWatch, he stated that he anticipates CoreWeave being included in the several AI-stock baskets that are popular at the moment during its initial days of trade.
“Given the very small float, any additions to demand can create large swings in the share price,” he stated.
Along with the findings of its cloud services on Nvidia’s Blackwell platform running AI inference, the company released a press release on Tuesday. It claimed to have set a new industry standard on Llama 3.1, one of the biggest open-source models.
