CoreWeave, a leading cloud-based GPU-as-a-Service provider, faces liquidity challenges highlighted by HSBC, which has placed a ‘Reduce’ rating on its stock with a $32 price target, indicating a potential 77% drop from its current price around $143. This negative outlook stems from low returns in the commoditized GPU cloud market and reliance on major clients like Microsoft and OpenAI, which account for 72% of CoreWeave’s revenue. HSBC analyst Abishek Shukla suggests that CoreWeave must transition towards general-purpose cloud services and diversify its customer base to enhance returns, though this shift could incur higher R&D and marketing costs. Additionally, rising energy and data center rental expenses are straining liquidity, compounded by OpenAI’s failure to provide the anticipated $15 billion cash commitment. With 96% of its revenue from committed contracts, CoreWeave must secure upfront payments from customers to support infrastructure development.
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