Is CoreWeave a Screaming Buy Right Now? 3 Reasons the Stock Could Hit $100 Before the End of the Year.

CoreWeave (NASDAQ:CRWV) stock has been battered this month as investor skepticism about the AI infrastructure trade and its steep build-out costs has grown.

After a post showing the neocloud stock's bond yields reaching as high as 15%, investors fled the stock, with some even anticipating its bankruptcy in the not-too-distant future.

Before a modest recovery on Monday in sympathy with Anthropic's IPO filing, CoreWeave stock had fallen 41% in less than three weeks, dragging down other AI infrastructure stocks with it.

However, that sell-off could be an attractive buying opportunity as CoreWeave has long been volatile, and there are a number of catalysts that could fuel its recovery. Here are three reasons why the stock could touch $100 a share by the end of the year, nearly doubling from its current price.

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1. Cloud capacity remains tight

The indications from AI companies that have already reported earnings this quarter, such as Space Exploration Technologies (Nasdaq: SPCX) and Meta Platforms, suggest that demand for AI compute continues to outstrip supply.

Elon Musk said that demand for SpaceX's AI infrastructure was so strong that the company anticipated a payback period of new deployments in less than a year, and that prices for older chips, like Nvidia (NASDAQ:NVDA) H100's are even higher than they originally were due to limited supply.

Amazon (Nasdaq: AMZN) CEO Andy Jassy said that his company's cloud capacity is nearly sold out through 2027, and that a good chunk of 2028 is sold out as well. He also said the company is struggling to keep pace with demand for AI compute, which explains why Amazon and its peers are spending so much on cloud infrastructure. Amazon Web Services (AWS) is the largest cloud infrastructure provider in the world, and if Amazon is sold over the next year, that should bode well for other cloud infrastructure companies like CoreWeave.

As long as demand is outrunning supply, CoreWeave is in a strong position.

2. Its partnership with Nvidia gives it a competitive advantage

Neocloud stocks are sometimes dismissed as commodity businesses, and that's true to some extent. However, CoreWeave does differentiate itself in one important way from its peers. The company has a close partnership with Nvidia, which benefits it in multiple ways.

Nvidia is a major investor in CoreWeave, taking a $2 billion stake in January following an earlier investment at the time of its IPO. Nvidia has also signed an agreement to backstop CoreWeave's demand, meaning it will buy as much as $6.3 billion in unused cloud computing capacity through 2032, which should alleviate any concern about CoreWeave needing customers. Finally, CoreWeave gets access to Nvidia's newest hardware, which enables it to rent it out to customers before its competitors.

Nvidia CEO Jensen Huang pushed back on the notion that CoreWeave was in trouble, saying that the company's cost of capital is decreasing, contradicting its rising bond yields.

Having Nvidia in its corner is a clear advantage for CoreWeave and should help protect the company from bankruptcy. In a worst-case scenario, Nvidia could even buy it.

3. Interest rates could continue to come down

Notably, interest rates have come down from their peak over the last three weeks, relieving the pressure on CoreWeave from its rising bond yields.

We don't know where interest rates could go from here, but CoreWeave could surge if they go meaningfully lower, as a big part of the bear case for the stock is that it will be crushed by interest payments and unable to refinance its debt if rates are too high.

Yields could edge lower following the Federal Open Market Committee meeting on Wednesday, during which the Fed will announce its rate decision and give commentary on the economy and where rates are headed.

CoreWeave will also have an opportunity to bounce back in its own third-quarter earnings report, expected on Nov. 11. Analysts see revenue jumping 159.4% to $3.54 billion, showing the company continues to deliver skyrocketing growth.

Investor attention may be focused on the company's debt and interest payments, but strong growth, a favorable outlook, and positive commentary from management can help turn around the narrative on CoreWeave.

If the Q3 results are strong, the stock's October swoon could become a distant memory.

Jeremy Bowman has positions in Amazon, CoreWeave, Meta Platforms, and Nvidia. The Motley Fool has positions in and recommends Amazon, Meta Platforms, and Nvidia. The Motley Fool has a disclosure policy.