Shares of CoreWeave (NASDAQ:CRWV) were brutally punished as shares eventually went on to shed more than 64% of their value from peak to trough. While the AI-driven cloud provider is still up comfortably from its IPO price, there has been growing concern about an AI bubble, especially in the smaller, higher-multiple names that have more growth promise.
With AI demand staying as hot as ever, perhaps investors who are comfortable with taking on more risk for greater growth might wish to give CoreWeave another look now that there’s some newfound momentum behind it to start the year. The stock has been on a decent rally in recent weeks, rising close to 50% from its December lows.
Undoubtedly, the sell-off was vicious and perhaps a bit overdone. But, what’s more, the firm stands out as a sizeable winner as the new generation of Nvidia (NASDAQ:NVDA | NVDA Price Prediction) chips launches in the second half of 2026. Of course, the debt concerns, customer concentration, and fears of an AI bubble remain.
Not much has changed about that. Still, with the valuation in a more modest spot today than at the end of last year, those who are confident in the firm’s strategy might wish to pick up a few shares should the AI trade find its footing again. Now, CoreWeave is still spending heavily in the new year, and that’s not going to sit right with many investors who are looking for lower-risk ways to trade AI.
AI infrastructure plays, as a whole, look oversold
Undoubtedly, lower risk tends to accompany less debt, big cash flow streams, and a model that’s already starting to pay dividends. With AI monetization still in the earlier stages, with many firms opting to front-load big bets, there’s doubt that things aren’t going to pan out as the big tech leaders expect. And while it’s fine to be skeptical, I do think that it’s a contrarian opinion to be bullish on the hard-hit AI infrastructure firms such as CoreWeave right now.
The big question moving forward is whether skyrocketing sales will cause investors to be a bit more forgiving of the firm’s high degree of leverage. Certainly, CoreWeave isn’t the only company that’s leveraged up to take advantage of what could be a generational opportunity to meet the AI compute needs of some of the hungriest innovators out there that can’t seem to be satiated.
After a vicious sell-off in the rearview, I think the question is whether coming revenue growth can continue to shock and awe. There’s definitely potential there, especially now that investors are becoming a tad more cautious on playing hyper-growth stocks into their quarterly results. Perhaps a choppy past nine months could set the stage for a better year ahead.
Vera Rubin looms, and it’s a bullish driver for the stock
Vera Rubin is a big deal, and with production already online, perhaps CoreWeave will be able to deploy a tad sooner than expected. Time will tell, but until AI demand fades, CoreWeave stands out as a name that doesn’t deserve to be punished so severely. Now, make no mistake, CoreWeave is a risky name to hold.
That’s why Citi has the stock in the “High Risk” category despite being quite bullish on the shares, with a Buy rating and a $135.00 price target, one of the very few targets that still entail double-digit percentage upside from current levels.
Even though the stakes are lower after a rough second half of 2025, the magnitude of risk remains too elevated for all but the bravest of investors. As such, I’d only look to nibble on shares gradually, rather than placing too big a bet at once. It might not take much for the tides to reverse, especially if Nvidia or another AI titan were to spark doubts about whether AI demand can keep rocketing higher.
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