Buy this AI cloud stock ahead of earnings, says Citi

Citi maintained its Buy rating on CoreWeave, raising its price target to $192 (52% upside) due to surging AI demand and strategic customer diversification. The bank anticipates significant revenue reacceleration and outsized beats, citing ~85% QoQ backlog growth from new deals with NVDA, META, and an OpenAI expansion, coupled with longer, non-cancellable contracts that mitigate customer concentration. This strong outlook is expected to drive continued large revenue beats and significant profitability improvements, building on the company's 216% stock surge since its March IPO.

Analysis

Citi has reiterated its Buy rating on CoreWeave (CRWV), significantly raising its price target to $192 from $164, implying a 52% upside. This optimistic outlook is primarily driven by surging artificial intelligence (AI) demand, positioning CoreWeave as a major beneficiary within the cloud computing sector. The bank anticipates substantial revenue reacceleration into Q4, fueled by new deals and customer ramps.

Analyst Tyler Radke highlights an estimated 85% quarter-over-quarter backlog growth, stemming from recent strategic deals with NVIDIA (NVDA), Meta (META), and an expansion with OpenAI. These partnerships, coupled with the upcoming Blackwell platform and customer ramps, are expected to generate outsized revenue beats exceeding $100 million. The company's strategy of diversifying its customer base and securing longer, non-cancellable contracts (5-6 years) is mitigating prior concerns regarding customer concentration.

The broader AI compute ecosystem remains robust, supported by strong results from Amazon (AMZN), Microsoft's (MSFT) short-term bookings capex strength, and persistent capacity constraints. Citi projects continued large revenue beats for CoreWeave through the second half of the year and forecasts significant profitability improvements by late 2026 and beyond. Since its March IPO, CoreWeave's stock has already surged nearly 216%, reflecting strong market confidence.

Key Decisions for Investors

• Investors should consider CoreWeave's strong growth trajectory and significant analyst price target upside, driven by robust AI demand and strategic customer diversification.
• Monitor CoreWeave's upcoming Q3 earnings report for confirmation of the projected ~85% QoQ backlog growth and outsized revenue beats, particularly given the high visibility from non-cancellable contracts.
• Evaluate the long-term implications of CoreWeave's customer diversification and extended contract durations, which are expected to enhance profitability and reduce concentration risk, potentially warranting a long-term position.