Does CoreWeave’s Recent Cloud Expansion Rally Signal a Compelling Opportunity in 2025?

• Wondering if CoreWeave is a hidden gem or overpriced hype? Let’s dig into what’s really behind the stock’s current value.
• While the stock is up an impressive 95.9% year-to-date, it has also seen some dramatic swings lately as it dropped 26.7% in just the past week and 41.6% over the past month.
• News of CoreWeave’s recent strategic partnerships and aggressive expansion into cloud computing have fueled investor optimism, driving up prices earlier this year. However, growing concerns about competition and market volatility seem to be dampening some of that enthusiasm right now.
• When it comes to the numbers, CoreWeave scores a 4 out of 6 on our valuation checks, indicating it is undervalued in several key areas. Up next, we’ll break down those valuation methods. Plus, stick around for a look at the smarter way savvy investors get the full story.

CoreWeave delivered 0.0% returns over the last year. See how this stacks up to the rest of the IT industry.

Approach 1: CoreWeave Discounted Cash Flow (DCF) Analysis

The Discounted Cash Flow (DCF) model estimates a company's intrinsic value by projecting its future cash flows and discounting them back to today's value. This method focuses on what the business could truly be worth based on its expected ability to generate cash in coming years.

For CoreWeave, the model uses a 2 Stage Free Cash Flow to Equity approach. The company’s latest twelve-month Free Cash Flow (FCF) is reported at -$12.02 Million, reflecting significant early investment. Analyst estimates suggest FCF will remain negative over the next few years, but notably, the projection turns positive by 2029, reaching $5.66 Million. Over the following years, FCF is expected to accelerate, with an estimated $29.57 Million by 2035. These longer-term forecasts are extrapolations and not direct analyst coverage.

Based on these projections, the DCF model calculates an intrinsic value of $387.82 per share. Given the current stock price, this reflects a 79.8% discount, meaning CoreWeave is trading well below what the model suggests it is worth.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests CoreWeave is undervalued by 79.8%. Track this in your watchlist or portfolio, or discover 884 more undervalued stocks based on cash flows.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for CoreWeave.

Approach 2: CoreWeave Price vs Sales

The Price-to-Sales (P/S) ratio is commonly used to value growth companies that are not yet profitable, such as CoreWeave. It allows investors to assess how much the market is willing to pay for each dollar of the company's annual sales. Unlike profit-based multiples, P/S provides meaningful comparisons even when earnings are negative. This makes it an especially relevant metric here.

A company’s “normal” or “fair” P/S ratio often reflects expectations for future growth and risk. Higher growth prospects usually justify a higher ratio, while significant risks or slowing growth may warrant a lower one. For CoreWeave, the current P/S ratio is 9.43x, which is notably higher than the IT industry average of 2.43x and its peer group average of 21.38x.

Simply Wall St's proprietary “Fair Ratio” for CoreWeave stands at 47.50x. Unlike general industry or peer comparisons, the Fair Ratio factors in more specific characteristics such as CoreWeave’s expected sales growth, business risks, profit margins, industry position, and overall market capitalization. This tailored approach gives a more accurate view of what the multiple really should be, especially for rapidly evolving companies like CoreWeave.

Comparing CoreWeave’s current P/S of 9.43x to the Fair Ratio of 47.50x suggests the stock may be significantly undervalued by this measure.

Result: UNDERVALUED

PS ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1405 companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your CoreWeave Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let's introduce you to Narratives. A Narrative is a simple yet powerful way to turn your perspective and understanding of a company into a story that connects the numbers, your fair value estimate, and your outlook for future revenue, earnings, and margins.

Narratives help you link CoreWeave’s unique story directly to a financial forecast, bridging the gap between what you believe about the business and what the data suggests. Using Narratives on Simply Wall St’s platform, trusted by millions of investors and available within the Community page, you can easily create or follow investment Stories for any company, including CoreWeave.

This tool helps you decide when to buy or sell by comparing the Fair Value calculated from your Narrative to the current market Price. Narratives also update automatically whenever new information, such as earnings or news, becomes available, ensuring your insights are always fresh.

For example, with CoreWeave, one investor might set a high Fair Value by projecting rapid AI cloud growth, while another could have a more conservative view by forecasting tougher competition. This demonstrates how Narratives let everyone reflect their own beliefs and strategies.

Do you think there's more to the story for CoreWeave? Head over to our Community to see what others are saying!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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