Morgan Stanley maintained an Equal-weight rating and a $99 price target on CoreWeave in its August note on the company’s Q2 results, saying the GPU cloud provider is accelerating its execution in generative AI data centers while still facing valuation pressure from heavy debt and significant customer concentration.
The bank summarized its view this way: 「CoreWeave has built a business exceeding $25 billion in scale within five years, something rarely seen in software, but its limited operating and financial history, high debt burden and notable customer concentration cannot be ignored.」
Record quarterly capacity increase
CoreWeave expanded both capacity and revenue in the second quarter of 2026. The company added 500MW of net active power during the quarter, the largest quarterly increase in its history and more than three times the level recorded a year earlier. Management reiterated its target of reaching at least 8GW by 2030, implying more than 6GW of additional growth over the next four years.
The company also lifted its full-year capital expenditure outlook, raising the midpoint by 12% to a range of $35.5 billion to $39 billion. Its Q3 capital expenditure guidance came in at $11.5 billion to $13.5 billion, above the market expectation of $10 billion. Morgan Stanley said that points to capacity deployment still speeding up.
That buildout is feeding directly into top-line growth. CoreWeave raised the midpoint of its FY26 revenue guidance by 2% to $12.4 billion-$13.2 billion, and increased the midpoint of ARR guidance by 3% to $18.5 billion-$19.5 billion. Q3 revenue guidance of $3.45 billion-$3.6 billion was slightly ahead of market expectations. Management also said ARR from its Managed Inference platform climbed from $1 million to more than $100 million and is expected to reach at least $250 million by year-end. Morgan Stanley viewed that as a clear sign that the company is moving from infrastructure leasing into higher-margin software services.
Margins improved, but durability is still debated
On profitability, CoreWeave posted an adjusted operating margin of about 8% in Q2, above the market expectation of 7.6%. The company also raised its full-year adjusted operating profit guidance by 6% to $960 million-$1.15 billion.
Still, Q3 adjusted operating profit guidance of $200 million-$260 million, implying a margin of 5.8% to 7.2%, came in below the market expectation of $262 million and a 7.6% margin. That leaves Q4 needing a sharp margin improvement for the company to meet its full-year target. Management said it expects a low double-digit margin in Q4, but the market remains skeptical, with concerns that the capital intensity of the expansion may be higher than expected and that the margin ramp could take longer.
Morgan Stanley forecasts CoreWeave’s operating margin at 15.9% in FY27 and 22.4% in FY28, but both figures still trail margins typically seen at software companies of similar scale. On free cash flow margin, the bank expects -216% in FY26, -119% in FY27 and -55% in FY28, with no move into positive territory before 2028.
Debt load and customer concentration remain the key valuation overhangs
Morgan Stanley said the debt burden continues to expand and remains a central reason for the valuation discount. The bank expects CoreWeave’s debt to rise to about $38 billion by the end of 2026, while free cash flow is projected to remain negative at least through 2028. The company has supplemented capital through equity financing, but at current funding costs, debt extension and refinancing risk remain material.
On valuation, Morgan Stanley’s SOTP-based price target is $99, built on 29x CY35 free cash flow. Peer valuation multiples are around 6x EV/CY27 revenue. The report said CoreWeave is not receiving a premium multiple given its leverage profile and concentrated customer base.
Customer concentration is another issue the bank did not sidestep. Morgan Stanley explicitly listed the possibility that major customers could choose to build AI compute capacity internally. If hyperscalers such as Microsoft and Amazon internalize more AI workloads, CoreWeave’s core demand base could face a direct hit. That risk, the bank said, is a main reason it kept the stock at Equal-weight rather than assigning an Overweight rating.
Current valuation seen as fairly reflecting the range of outcomes
Morgan Stanley projects FY27 revenue of $28.6 billion and earnings per share of $1.91 for CoreWeave. With the stock trading at about $90, that implies roughly 47x FY27 earnings. In the bank’s view, that valuation already captures a broad range of possible outcomes for a GPU cloud company that is still spending aggressively, generating negative free cash flow and carrying a rising debt load. Those outcomes include structural demand growth tied to GenAI data centers as well as downside tied to funding costs and customer concentration.
The ratings, price target, earnings forecasts and related judgments cited here come from Morgan Stanley’s Aug. 12, 2026 research report and reflect the views of the firm’s analysts and institution, not investment advice.