Investors in the artificial intelligence sector should watch CoreWeave (CRWV) closely. The cloud provider powers its servers with graphics chips. It will become the first firm to provide GPUs at scale.
After its recent initial public offering, CRWV stock is volatile. Shares briefly traded as high as $64.62 before closing at $39.09 last week. Short sellers are not ready to bet against the firm, where the short interest is 1.61%. Bears are not yet convinced that AI firms like Cohere or IBM (IBM) will have Nvidia GB200 systems that would hurt CoreWeave’s moat.
The firm announced in January a collaboration with IBM to “deliver new AI supercomputer for IBM Granite models.” Sriram Raghavan, vice president of AI at IBM Research, said that the collaboration would help IBM’s capabilities. It offers cost-efficient, high-performance models that complement IBM’s Watsonx.
Catalyst
Microsoft (MSFT) recently announced cuts to its capital expenditures in cloud servers. It wants other firms to build data centers. As a result, expect Microsoft to lease its capacity to the firm. This would benefit firms like CoreWeave.
Risks
Hedgeye issued a short report against CRWV stock. However, the small dip in the stock suggests that the bearish bet will not pay off. Tech investors are willing to bet on CoreWeave as it grows. Similarly, stock markets rewarded investors who bought Palantir (PLTR) in the last few years.