CoreWeave Plummets 5.3% Amid AI Sector Jitters: What's Fueling the Selloff?

Summary
• CoreWeave (CRWV) trades at $68.504, down 5.3% from its $72.35 previous close
• Intraday range spans $67.875 to $71.5, with turnover hitting 21.6 million shares
• Mizuho cuts CRWV price target to $92 from $120, maintaining 'Neutral' rating
• Sector peers like Amazon (AMZN) dip 0.18%, signaling broader market caution

CoreWeave’s sharp selloff has ignited speculation about the sustainability of its AI infrastructure boom. With the stock trading near its 52-week low of $33.515 and a dynamic PE of -34.42, investors are grappling with a confluence of operational headwinds, sector-wide AI skepticism, and capital structure concerns. The 5-day losing streak underscores a fragile technical backdrop, while Mizuho’s revised price target and operational delays at CoreWeave’s Texas data centers amplify near-term risks.

AI Infrastructure Woes and Capital Constraints Drive CRWV Down
CoreWeave’s collapse stems from a perfect storm of sector-specific and company-specific factors. The AI infrastructure sector faces growing skepticism about overvaluation, with CRWV’s 60% decline from June highs mirroring broader sell-offs in AI-linked names. Company-specific catalysts include margin pressures from large-scale deployments, a $2 billion convertible notes offering, and operational delays caused by Texas rainstorms. Mizuho’s price target cut to $92 reflects reduced 2026 growth expectations, while failed acquisition attempts and heavy reliance on NVIDIA chips and high-interest debt amplify leverage risks. The stock’s inability to reclaim its 50-day moving average (currently at $85.69) signals deteriorating momentum.

Data Processing Sector Faces Mixed Signals as Amazon Holds Steady
The Data Processing & Outsourced Services sector, led by Amazon (AMZN) at -0.18%, shows resilience despite CRWV’s collapse. Application outsourcing markets are projected to grow to $899 billion by 2034, driven by cloud adoption and AI integration. However, CRWV’s struggles highlight sector-specific fragility: heavy debt loads, customer concentration risks, and infrastructure bottlenecks. While Amazon’s stable pricing contrasts with CRWV’s volatility, the sector’s growth narrative remains intact, with firms like Oracle (ORCL) and Broadcom (AVGO) also facing AI spending slowdowns.

Options Playbook: CRWV Puts Shine Amid Volatility Surge
• Kline pattern: Short-term bearish trend
• MACD: -5.23 (below signal line -6.86), histogram rising
• RSI: 48.71 (neutral), Bollinger Bands: 64.90–91.92
• 30D MA: $85.69 (above current price), 100D MA: $108.62

CRWV’s technicals and options chain suggest a bearish setup. The stock is trading near its lower Bollinger Band ($64.90) and below key moving averages. Two top options for short-term bearish exposure are:

• CRWV20251226P68 (Put): Strike $68, Expiry 12/26
- IV: 81.44% (high volatility)
- LVR: 20.12% (moderate leverage)
- Delta: -0.435 (sensitive to price drops)
- Theta: -0.047 (moderate time decay)
- Gamma: 0.0405 (responsive to price swings)
- Turnover: 186,008 (liquid)
- Payoff at 5% downside ($65.08): $2.92 per contract
- This put offers a balance of leverage and liquidity, ideal for a 5% move.

• CRWV20251226P70 (Put): Strike $70, Expiry 12/26
- IV: 78.23% (moderate volatility)
- LVR: 15.89% (lower leverage)
- Delta: -0.519 (high sensitivity)
- Theta: -0.017 (low time decay)
- Gamma: 0.0426 (high responsiveness)
- Turnover: 350,336 (high liquidity)
- Payoff at 5% downside ($65.08): $4.92 per contract
- This put’s low theta and high gamma make it ideal for a sharp drop, with high turnover ensuring ease of entry.

Aggressive short-sellers may target CRWV20251226P68 if the $64.90 support breaks, while CRWV20251226P70 offers a safer play if the stock consolidates near $70.

Backtest CoreWeave Stock Performance
The iShares Core S&P U.S. ETF (CRWV) has demonstrated resilience following a -5% intraday plunge from 2022 to the present. The backtest reveals a 3-day win rate of 54.35%, a 10-day win rate of 53.26%, and a 30-day win rate of 52.17%, indicating a higher probability of positive returns in the short term after such events. The maximum return during the backtest period was 18.94%, which occurred on day 39, suggesting that while there is volatility, CRWV can experience significant recovery in the aftermath of a sharp decline.

CRWV at Crossroads: Short-Term Bearish Setup with Key Levels to Watch
CoreWeave’s technical and fundamental challenges suggest a near-term bearish bias, with critical support at $64.90 and resistance at $70.71. A break below $64.90 could trigger a test of the 52-week low, while a rebound above $70.71 might attract short-covering buyers. Sector leader Amazon’s -0.18% move indicates broader caution, but the data processing sector’s long-term growth trajectory remains intact. Investors should monitor Mizuho’s revised guidance and CoreWeave’s debt management strategies. For now, the CRWV20251226P68 and CRWV20251226P70 options offer compelling short-term bearish exposure, with liquidity and leverage aligning with the stock’s volatile profile.