CoreWeave: Circular Economy Skeptics Debunked with Strong Buy Rating

CoreWeave's deal cadence has significantly reduced demand risks for the next 5-7 years and countered the circular economy argument. The company's strong performance is attributed to its unique business model and robust growth prospects. Despite market skepticism, CoreWeave's prospects remain highly favorable.

CoreWeave Inc. (CRWV) has secured a significant long-term cloud infrastructure deal with Meta Platforms, Inc. (META), committing up to US$14.2 billion for AI-focused computing capacity through 2032 and potential for further extension. This agreement underscores Meta's strategic commitment to expanding its artificial intelligence capabilities and positions CoreWeave as a key player in the AI infrastructure landscape.

The deal, which follows a series of high-profile contracts including one with OpenAI worth US$22.4 billion, signals CoreWeave's growing status as an integral AI infrastructure backbone. The company has emerged as a leader in what some describe as the "neocloud" revolution, constructing purpose-built data centers optimized for Nvidia (NVDA) GPUs. CoreWeave's rapid scale-up and focus on AI-driven computing have made it one of the fastest-growing cloud infrastructure players in the market.

The agreement with Meta Platforms significantly reduces demand risks for CoreWeave over the next 5-7 years, countering the circular economy argument. The company's strong performance is attributed to its unique business model and robust growth prospects. Despite market skepticism, CoreWeave's prospects remain highly favorable, with analysts maintaining a cautious optimism.

CoreWeave's second-quarter 2025 results highlighted its swift contract victories and scale development, with a revenue backlog standing at US$30.1 billion as of June 30th. The company's operational growth is evident in its power footprint, which closed Q2 with 470 MW of operating capacity and 2.2 GW under contract. CoreWeave's purchase of Weights & Biases further bolsters its developer tools and observability functions, enhancing its value proposition.

Analysts expect CoreWeave to maintain its growth trajectory, with a "Moderate Buy" rating consensus and price estimates ranging from US$32 to US$200. The mean target of US$139.08 offers an upside of around 1% compared to the current stock price. Despite the extended valuation, investors are optimistic about CoreWeave's ability to execute on its growth strategy.

In conclusion, CoreWeave's strategic deal with Meta Platforms solidifies its position in the AI infrastructure market and reduces demand risks over the next several years. The company's unique business model and robust growth prospects make it an attractive investment opportunity for those seeking exposure to the AI and cloud infrastructure sectors.