CoreWeave's Volatile Drop: A Market Crossroads Amid AI Infrastructure Turbulence

Summary
• CoreWeave (CRWV) plunges 6.9% intraday to $133.12 amid HSBC’s bearish downgrade and valuation concerns.
• Options frenzy erupts with $130 put options surging 121% as traders bet on further declines.
• HSBC warns of 77% downside potential, citing customer concentration risks and GPU commoditization.

CoreWeave’s volatile selloff has sent shockwaves through the AI infrastructure sector, with the stock trading near its 52-week low of $33.515. The selloff follows a bearish report from HSBC, which slashed its price target to $32—77% below the previous close. With intraday volumes hitting 11 million shares and technical indicators flashing bearish signals, investors are scrambling to parse whether this is a buying opportunity or a red flag in the AI cloud computing space.

HSBC's Bearish Call Ignites Sell-Off Amid Revenue Concentration Woes
The sharp intraday decline in CoreWeave stems from HSBC’s aggressive downgrade, which cited structural risks in the company’s business model. The firm highlighted that 72% of CoreWeave’s Q1 2025 revenue came from Microsoft, with OpenAI accounting for the majority of its backlog. This customer concentration, combined with the firm’s lack of value-added software services (Microsoft and OpenAI do not use CoreWeave’s proprietary tools), has eroded perceived competitive advantages. HSBC also flagged the stock’s overvaluation, noting a forward sales multiple of 8.11X despite negative free cash flow and a -121% return on equity. The downgrade triggered a cascade of short-term options activity, with put options expiring July 25 seeing massive volume surges.

Bearish Playbook: Leveraged Puts and Technical Breakdown Triggers
• Key Technicals: RSI at 40.94 (oversold), MACD -5.095 (bearish divergence), Bollinger Bands pinning price near $126.71 lower band.
• 30D Moving Average: 154.66 (current price at 133.12, 14% below).
• Support Levels: $131.93 (intraday low), $126.71 (Bollinger lower band).

Top Options Picks:
• CRWV20250725P130
- Type: Put
- Strike Price: $130
- Expiration: July 25
- IV: 104.58% (high volatility)
- Leverage Ratio: 18.68%
- Delta: -0.4099 (moderate sensitivity)
- Theta: -0.1662 (slow time decay)
- Gamma: 0.0177 (responsive to price swings)
- Turnover: 652,796 shares
- Payoff Calculation: At 5% downside (126.46), payoff = $3.54 per contract (130 - 126.46).
- Why It Stands Out: High leverage and liquidity make it ideal for a short-term bearish trade, with implied volatility suggesting market anticipation of further declines.

• CRWV20250725P132
- Type: Put
- Strike Price: $132
- Expiration: July 25
- IV: 108.75% (extreme volatility)
- Leverage Ratio: 15.74%
- Delta: -0.4459 (strong sensitivity)
- Theta: -0.1629 (moderate decay)
- Gamma: 0.0174 (stable gamma)
- Turnover: 99,980 shares
- Payoff Calculation: At 5% downside (126.46), payoff = $5.54 per contract (132 - 126.46).
- Why It Stands Out: Aggressive short play with maximum leverage and high implied volatility, capitalizing on the stock’s proximity to the $130 psychological level.

If $126.71 breaks, CRWV20250725P130 offers short-side potential. Aggressive bears may consider CRWV20250725P132 into a breakdown below $130.

Backtest CoreWeave Stock Performance
The iShares Core S&P U.S. ETF (CRWV) has historically shown resilience after experiencing a significant intraday plunge of at least -7%. Backtesting reveals a 3-day win rate of 45.71%, a 10-day win rate of 34.29%, and a 30-day win rate of 28.57% following such events. While the ETF tends to rebound in the short term, the maximum return observed was only 6.88% over 30 days, suggesting that while gains are possible, they may be modest.

Short-Term Volatility Expected: Position for the $126.71 Threshold
CoreWeave’s near-term trajectory hinges on its ability to defend the $126.71 Bollinger lower band and whether the $130 put options’ implied volatility holds. With HSBC’s bearish thesis and the stock trading at a 32% discount to its 30D moving average, the risk-reward profile tilts toward short-term volatility. Investors should monitor the sector leader, Amazon (AMZN), which is up 0.4% intraday—suggesting broader market resilience but no immediate sector support for CRWV. For now, the path of least resistance appears lower, with $126.71 the critical threshold to watch for further breakdown signals.