Bank of America Says CoreWeave Stock Can Gain 25% from Here. Should You Buy CRWV Now?

CoreWeave's (CRWV) profitability sank sharply last quarter, and the company continues to face intense competition, while its stock-based compensation (SBC) is climbing sharply. Moreover, a number of the name's valuation metrics have risen meaningfully in the last few months to high levels. Therefore, although Bank of America made several valid points about the firm's positive catalysts recently and predicted that its stock can rise 25%, I do not recommend that investors buy CRWV stock at this time. 

About CoreWeave

The company “operates a cloud platform that provides scaling, support, and acceleration for GenAI,” along with related infrastructure. Among its customers are Meta (META), OpenAI, NASA, and Mizuho Bank (MFG), one of Japan's leading financial institutions. 

In the fourth quarter, CoreWeave's revenue jumped to $1.57 billion versus $757 million during the same period a year earlier. Its price-sales ratio is an elevated 6.8 times. 

Major Profitability Declines Amid Intense Competition and Soaring Share-Based Compensation

In Q4, CoreWeave reported an operating loss of $89 million versus an operating profit of $113 million during the same period a year earlier. Further, its net loss ballooned to $452 million, compared with a net loss of just $51 million in Q4 of 2024. Much was made of the fact that the company is spending a great deal on capital expenditures (CapEx) in order to meet rising demand, and CRWV did correctly suggest that this spending will help boost its revenue in the long term. On the positive side, the company's adjusted EBITDA, which excludes the depreciation caused by CapEx, did jump to $898 million from $486 million. 

But much less attention was paid to the large jump in the firm's share-based compensation (SBC), which is also excluded from adjusted EBITDA. Major increases in SBC can cause stock prices to drop meaningfully over time. 

As I noted in my previous article on CRWV, the company "has to contend with competition from both Amazon (AMZN) and Microsoft (MSFT)." I added that  “Since those two giants have much bigger R&D and marketing budgets than CRWV, along with leverage over many key firms that depend on their products, they may be able to take a sizable market share from CoreWeave in the medium-to-long-term.”

A potential consequence of this intense competition that I did not consider when I wrote the previous column is that CoreWeave may have to pay a great deal for both human capital and raw material, in order to attain large amounts of them while Amazon and Microsoft are seeking to do likewise. And to the extent that the AI boom intensifies, CoreWeave's costs in these areas will probably accelerate further.
In Q4, CRWV ‘s SBC jumped to $157 million versus just $8 million in Q4 of 2024. And in all of 2025, the firm’s SBC rose to $630 million from only $31 million in 2024.

It appears that the company is using SBC as a means to compete with MSFT, AMZN, and other companies in its sector for human capital. And although SBC does not lower companies' cash reserves or show up in its cash flows or adjusted EBITDA, it can, through dilution, weigh a great deal on stock prices if it remains elevated over extended time periods. 

Extended Valuations

CoreWeave's price-book ratio has increased to 12.8 times, up from 9.28 times at the end of last year, while its Enterprise Value/EBITDA ratio rose to 28.16 times from 23.9 times in December 2025. Also importantly, its Enterprise Value advanced to $69.6 billion from $52.85 billion. 

As a consequence of these gains in a number of the firm's valuation metrics, its stock has become meaningfully less attractive. 

Bank of America Made Some Good Points

The bank asserted that CoreWeave can benefit from “sustained demand for AI compute,” along with its alliances with top-notch AI firms such as Nvidia (NVDA) and OpenAI. Additionally, BoA is bullish on the company's “proprietary software optimized for AI workloads, ”

In my previous column, I cited CoreWeave's “strong AI growth” and its “deals with both Meta and OpenAI” as important strengths for the firm. Further, given the company's impressive revenue growth and its sterling customer list, I believe that the firm's software is indeed probably quite effective. 

The Bottom Line on CRWV Stock

There's a great deal to like about CRWV. But at this time, its negative attributes make it a “Hold” rather than a “Buy.”