HSBC has lowered its target price on CoreWeave (NASDAQ:CRWV) to $41.00 from $44.00 and retained a Reduce rating, citing concerns that rising interest expenses will weigh on the company’s financials. The $41 target corresponds to the analyst low identified by InvestingPro, which also flags that the stock is trading above its Fair Value given the current share price of $111.10.
The bank highlighted a 250 basis point widening in CoreWeave’s credit default swap spreads as of the third quarter of 2025, which points to materially higher borrowing costs going forward. Based on that move, HSBC suggests the company would have to accept a yield north of 10% on any new debt issuance, compared with an effective interest cost of roughly 9% recorded in the same quarter.
Liquidity metrics presented alongside the note underscore the firm’s caution. InvestingPro data cited by HSBC shows a current ratio of 0.49 and a debt-to-equity ratio of 4.85, measures that indicate short-term obligations outstrip liquid resources and leverage is substantial. Those metrics underpin HSBC’s projection that CoreWeave could face a liquidity shortfall of $9.8 billion in 2026, a gap that the bank believes will likely require additional borrowing at higher yields.
HSBC’s calculations take into account capital actions already completed and announced: a $2 billion equity injection from NVIDIA in January 2026 and the sale of 1.75% convertible notes in December 2025. Even after those events, the lender’s view is that the company’s cash burn and financing needs will persist. The last twelve months show a negative free cash flow yield of -14%, which HSBC cites as evidence the business is rapidly consuming cash.
As a result of increased interest expense expectations, HSBC trimmed its non-GAAP earnings per share estimates for 2027 through 2030 by between 12% and 33%. At the same time, the bank improved its 2026 non-GAAP EPS projection to $0.15 from a prior -$0.06 assumption, reflecting revised expectations for debt levels in that year. Despite the change, HSBC’s 2027-2030 EPS forecasts remain 58% to 92% below consensus, which continues to model a decline in CoreWeave’s effective debt rate to 7.7% by 2029 from 9.9% in the third quarter of 2025.
Market reaction to CoreWeave’s capital developments has been mixed. The company secured a $2 billion equity investment from NVIDIA that is intended to support the buildout of more than 5 gigawatts of AI factories by 2030 and increased NVIDIA’s ownership to roughly 9%. That strategic infusion has prompted more optimistic responses from several brokers.
DA Davidson, Jefferies, and Freedom Capital Markets have each reaffirmed Buy ratings on CoreWeave, with price targets of $110.00, $120.00, and $100.00, respectively. Deutsche Bank moved to upgrade the stock from Hold to Buy and raised its price target to $140.00, citing a favorable medium-term outlook and the expectation of the company publishing full-year guidance for 2026. Deutsche Bank also suggested the expanded collaboration with NVIDIA will reduce execution risk and aid scaling. Stifel, meanwhile, left its rating at Hold but acknowledged the significance of NVIDIA’s investment.
The divergent analyst responses reflect a split between concerns about CoreWeave’s near-term financing and optimism about its strategic capital ties and growth plans. HSBC’s view is firmly focused on the immediate financing environment and the implications of higher borrowing costs, while other firms place more weight on the NVIDIA partnership and potential operational upside.
Clear summary
HSBC cut CoreWeave’s price target to $41 and retained a Reduce rating due to expected higher interest costs and a projected $9.8 billion liquidity shortfall in 2026, despite a $2 billion equity investment from NVIDIA and recent convertible note issuance. Other brokers have reacted more favorably to the NVIDIA stake, reaffirming Buy ratings and setting higher price targets.
Key points
- HSBC reduced its target to $41 and kept a Reduce rating, citing widening credit spreads and higher expected borrowing costs.
- InvestingPro data show a current ratio of 0.49 and debt-to-equity of 4.85, while free cash flow yield for the last twelve months is -14%.
- Several brokers reiterated Buy ratings and higher targets after NVIDIA’s $2 billion equity investment, while Deutsche Bank upgraded to Buy with a $140 target.
Risks and uncertainties
- Higher interest rates and wider credit spreads could force CoreWeave to issue debt at yields above 10%, increasing interest expense - this affects bond markets and credit-sensitive sectors.
- A projected $9.8 billion liquidity shortfall in 2026 may require further capital markets activity, which could dilute shareholders or raise financing costs - relevant to equity and debt investors and data-center capital markets.
- Disagreement among analysts on effective interest rate trajectories and EPS forecasts creates valuation uncertainty, impacting equity market expectations for the company.
This article focuses solely on the facts and estimates cited above and does not include additional commentary beyond the information provided.