CoreWeave Faces Sharp Correction; Long-Term Growth Potential Amidst Volatility and Profit Risks

Technical Analysis

CoreWeave (CRWV) experienced a sharp correction on June 5, 2025, closing at $135.05, down 17.20% from the prior session. The intraday range of $132.82 to $157.46 shows a strong volatility spike, reflected by an Average True Range (ATR) of 10.83. Despite the steep pullback, the stock remains well above its 50-day and 200-day moving averages, both at roughly $65.62, indicating the longer-term uptrend remains intact. The 14-day RSI at 70 suggests the stock was overbought before the drop, aligning with the sharp reversal. Immediate support is identified near $123.97, with a stop-loss at $127.49, while resistance stands at $150.48, just below recent highs. The MACD at 25.62 confirms prior bullish momentum but may be vulnerable to short-term weakening.

For the next trading day (June 6), moderate volatility is expected with a technical bounce possible near support levels if broader market conditions stabilize. However, follow-through selling cannot be ruled out given the volume spike (50.14 million versus a 21.37 million average), implying profit-taking or a shift in short-term sentiment. Over the upcoming week, price action will likely be range-bound between $124 and $150, awaiting fresh catalysts or earnings on August 13, 2025.

Fundamental Analysis

CoreWeave’s market capitalization stands at approximately $64.82 billion. The company remains unprofitable with a trailing twelve months (TTM) EPS of -$2.54 and a corresponding negative P/E of -53.17, indicative of continued investment into growth rather than earnings. The earnings announcement is scheduled for August 13, which represents a key event for fundamental direction.

Analyst consensus leans bullish, with 4 buys and 3 holds, yielding an overall "Buy" consensus despite zero strong buy ratings. The consensus target, however, at $56.13, is well below current prices, which could denote elevated expectations currently priced into the stock or caution from some market participants. This discrepancy suggests mixed sentiment regarding valuation and growth sustainability.

Recent news highlights include a strategic 15-year contract between CoreWeave and Applied Digital, underpinning CoreWeave’s competitive position in AI infrastructure. Notable investor attention from Altimeter Capital signifies confidence in CoreWeave’s AI market potential. However, the steep price decline on June 5 likely reflects a near-term sentiment correction after a parabolic run.

Intrinsic Value and Long-Term Investment Potential

The intrinsic value of CoreWeave is difficult to assess precisely given the negative earnings and high growth orientation. Its valuation hinges largely on future revenue growth and market penetration in AI cloud computing infrastructure. The company’s relatively young IPO (late March 2025) and partnerships with significant players such as Nvidia suggest strong secular tailwinds.

Given the stock’s elevated RSI, premium market capitalization, and a sell-side consensus target substantially below current prices, the valuation appears stretched. Long-term investment appeal rests on CoreWeave’s ability to translate AI demand growth into profitability and sustainable cash flow. Risks include high operational expenses, competition from established semiconductor and cloud infrastructure providers, and market volatility amplified by recent sharp price moves.

Overall Evaluation

CoreWeave currently presents as a volatile growth stock with a strong technical uptrend disrupted by an abrupt correction. The short-term outlook for June 6 suggests possible stabilization near support with elevated volatility. Over the next week, trading is likely to consolidate between $124 and $150, pending fundamental news.

From a fundamental outlook, CoreWeave is priced for aggressive growth but carries execution and valuation risks given negative earnings and a wide gap between price and analyst targets. The partnership backlog and AI market exposure underpin medium to long-term potential, but investor caution is warranted until profitability trends improve or earnings guidance clarifies growth sustainability.

Considering these factors, the stock is categorized as a “Hold” candidate. The current pullback offers a potential entry point for investors weighing the long-term AI opportunity but demands risk tolerance for volatility and evolving fundamentals. Short-term traders may find better risk/reward in waiting for greater clarity post-correction or after the August earnings release.