The AI Cloud Darling in Freefall?
CoreWeave, one of the most talked‑about names in the artificial intelligence infrastructure boom, has been riding an almost surreal wave of investor enthusiasm since its IPO. The company, known for its GPU‑driven cloud services powering AI workloads, has captured headlines with massive contracts, deep partnerships with industry giants, and breakneck revenue growth. Yet, despite all the buzz, the stock has been battered over the past month, plunging to levels where technical signals scream “oversold.”
One of those signals? The Relative Strength Index (RSI) dipping below 30—a classic indicator that a stock has been oversold to the point of potential undervaluation. For contrarian investors, this raises an exciting question: is CoreWeave at the start of a rebound, or is this a falling knife best avoided?
This deep dive will explore CoreWeave’s business, technical setup, valuation metrics, growth potential, risks, and whether its current state truly represents a rare buying opportunity.
The Rise of CoreWeave: From Crypto Roots to AI Powerhouse
CoreWeave wasn’t always an AI infrastructure leader. Originally founded as a crypto‑mining operation, the company pivoted in 2019 to repurpose its GPU fleet for high‑performance cloud computing. That decision transformed CoreWeave into a crucial player in the rapidly expanding world of artificial intelligence workloads.
Today, CoreWeave operates dozens of data centers across the United States and Europe, offering GPU‑accelerated computing solutions to some of the biggest names in AI. Its customer base includes OpenAI, Microsoft, and other tech titans who rely on CoreWeave’s infrastructure to train and deploy massive AI models. The company’s partnership with Nvidia, which supplies it with cutting‑edge GPUs like the H100 and Blackwell series, ensures CoreWeave maintains a competitive advantage in the arms race for compute power.
After going public in 2025, CoreWeave quickly became a market darling, attracting attention for its blistering revenue growth, headline‑grabbing contracts, and aggressive acquisition strategy. However, the stock market is a fickle beast, and even the most promising companies can fall out of favor quickly.
Technical Analysis: Why the RSI Matters
Technical analysts often rely on the RSI to gauge whether a stock is overbought or oversold. An RSI below 30 typically signals that a stock has been subject to excessive selling pressure and may be due for a bounce. CoreWeave’s RSI recently fell below this critical threshold, triggering alerts across trading desks.
Why is this important? Historically, stocks that dip below 30 often experience at least a short‑term rebound as sellers exhaust themselves and bargain hunters step in. The key is determining whether this is merely a technical bounce or the start of a sustained uptrend.
While RSI alone doesn’t guarantee a reversal, when combined with strong fundamentals, it can create a powerful setup for contrarian investors willing to take calculated risks.
Valuation: Is CoreWeave Truly Undervalued?
The term “undervalued” is subjective, but investors generally look at metrics like price‑to‑sales (P/S) and price‑to‑earnings (P/E) ratios to assess whether a stock is cheap relative to its peers. CoreWeave’s P/S ratio remains high compared to traditional cloud providers, but when compared to high‑growth AI infrastructure peers, it appears more reasonable.
What makes CoreWeave intriguing is its growth outlook. Analysts project revenue to grow severalfold over the next two years, driven by long‑term contracts with OpenAI and other customers. If those projections hold true, the current valuation may look cheap in hindsight. However, the company’s heavy debt load and reliance on a few key customers introduce risks that cannot be ignored.
The Bull Case: Why Investors Are Excited
Despite recent weakness, there are several reasons bulls believe CoreWeave is poised for a rebound:
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Oversold Technical Setup
The RSI dipping below 30 suggests selling pressure may have peaked, making the stock attractive for a technical bounce. -
Explosive Revenue Growth
CoreWeave has been posting jaw‑dropping revenue growth, with expectations of continuing triple‑digit gains as AI adoption accelerates. -
Premium Partnerships
Relationships with Microsoft, OpenAI, and Nvidia provide a strong demand pipeline and access to the best GPUs on the market. -
Strategic Acquisitions
Recent acquisitions like Weights & Biases and Core Scientific strengthen CoreWeave’s infrastructure and broaden its offerings. -
Massive Backlog
A multibillion‑dollar backlog gives the company visibility into future revenues and strengthens the bullish case.
For investors who believe in the long‑term AI trend, CoreWeave’s current weakness could be a golden entry point.
The Bear Case: Risks That Can’t Be Ignored
On the flip side, bears argue that CoreWeave’s risks far outweigh the potential upside:
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Customer Concentration
A huge percentage of revenue comes from a single customer, Microsoft. Any change in this relationship could have devastating effects. -
Debt Burden
CoreWeave carries significant debt, and high interest expenses could eat into profitability for years to come. -
Valuation Still High
Even after the recent selloff, CoreWeave trades at multiples far above industry averages, leaving little room for error. -
Technical Momentum Remains Weak
Beyond the RSI, most technical indicators still point to a bearish trend, suggesting the stock may have further to fall. -
Lock‑Up Expiration Risk
When insider lock‑ups expire, a flood of new shares could hit the market, pressuring the stock price even more.
These factors mean CoreWeave is not a low‑risk investment by any stretch of the imagination.
Strategy: How to Play This Setup
For traders and investors considering CoreWeave, the key is timing and risk management. Here are a few strategies to consider:
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Wait for Confirmation: Watch for the RSI to rebound above 40 and for volume to increase, signaling that buyers are returning.
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Use Stop Losses: Protect yourself from a larger drop by setting a stop just below recent support levels.
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Scale In Slowly: Instead of going all in, build your position gradually to average your entry price.
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Keep an Eye on Catalysts: Earnings reports, merger updates, and customer announcements could all move the stock significantly.
A disciplined approach can turn a high‑risk setup into a calculated bet.
Long-Term Outlook: The AI Infrastructure Megatrend
Regardless of short‑term volatility, the long‑term AI infrastructure story is compelling. Companies like CoreWeave sit at the intersection of several megatrends: cloud computing, artificial intelligence, and high‑performance hardware. Demand for GPU compute power is only going to rise, and CoreWeave is well‑positioned to capture its share of this growth.
The question is whether the company can execute flawlessly while managing its debt and customer concentration risks. If it can, CoreWeave could become one of the most valuable players in the AI ecosystem. If not, today’s “undervaluation” could be a mirage.
Conclusion: Undervalued or Overhyped?
So, is CoreWeave truly “extremely undervalued” with its RSI dipping below 30? The answer is nuanced. Technically, the stock has shown signs of being oversold, which could lead to a near‑term bounce. Fundamentally, the company’s growth potential is enormous, but so are the risks.
For aggressive investors who can stomach volatility, CoreWeave offers a high‑risk, high‑reward opportunity. For conservative investors, the debt, customer concentration, and ongoing technical weakness may be deal‑breakers.
In the end, CoreWeave is a stock that requires careful monitoring, strict risk controls, and a strong belief in the AI cloud megatrend. If you’re willing to take the leap, it could pay off handsomely—but only time will tell if this is a buying opportunity or a value trap in disguise.
đź’ˇ Final Word: CoreWeave’s story is far from over. Whether you see the glass as half full or half empty, one thing is clear—this is not a stock to ignore.
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