This Artificial Intelligence (AI) Stock Could Soar by 63%, According to Wall Street

Whether the artificial intelligence (AI) bubble will soon burst is the subject of heated debates on Wall Street. Some believe that the pace the industry has experienced in recent years can't last much longer, while others argue that AI infrastructure spending tells a very different story. For those bullish on the future of AI, there are attractive stocks to consider buying right now. One of them may be CoreWeave (NASDAQ:CRWV), a company that rents out AI computing capacity. Wall Street seems excited about CoreWeave's prospects: The company's average price target of $141.39 (according to Yahoo! Finance) implies about 63% upside from current levels. Should investors rush to purchase CoreWeave's shares?

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Rapidly-growing revenue

CoreWeave’s recent second-quarter update was solid, especially on the top line. The company's revenue increased by 112% to $2.6 billion. True, its operating income of $19 million in the year-ago period turned into an operating loss of $49 million this time around. The bottom line also worsened, going from a loss per share of $0.60 in Q2 2025 to $1.14 per share. Some may see that as a bad sign. However, building AI computing capacity isn't cheap. The investment is worth it insofar as there are good reasons to believe CoreWeave can experience sustained demand for its services over the medium term.

The skeptics are, well, skeptical, and that's one reason the stock has underperformed broader equities year to date. That's not the only reason. Even investors otherwise bullish on AI would point out that CoreWeave's rising debt, heavy reliance on a few customers that account for most of its revenue, and recent share dilution are significant concerns worth monitoring.

Under a bearish scenario, CoreWeave's revenue growth could slow substantially, leading to worse margins and deeper operating and net losses. If that happens, the stock could decline significantly from current levels. But there is also a bullish argument backed by data. Consider, for instance, that CoreWeave ended the second quarter with a revenue backlog of $104 billion, not including more than $25 billion it had already added in the early weeks of the third quarter.

CoreWeave might not translate every single piece of that into actual recognized revenue. Also, since it has long-term contracts, some of that money won't be recognized as revenue until well into the future, and we need to factor it all in. However, an important point here is that CoreWeave's backlog is expanding -- not shrinking or even staying the same. CoreWeave's revenue backlog grew by about 5% quarter over quarter and by 246% year over year.

This arguably points to sustained, perhaps even accelerating, demand for its services. And management highlighted several other facts that also point to the same conclusion. For instance, CoreWeave's capacity is apparently largely sold out across both current and prior generations of Nvidia's GPUs (graphics processing units) in the near term. Not only does this justify increased spending on its AI build-out, but it also suggests that the company may be able to price its services at a premium as its customers demand more capacity.

These are all signs of a healthy business that should continue growing its revenue at a good clip, at the very least, over the next few quarters. Also, note that CoreWeave's $104 billion backlog is more than 13 times the company's trailing-12-month revenue of $7.59 billion. And again, some of that backlog is tied to long-term contracts that should contribute to the company's results for a while. That paints a bright picture for CoreWeave's future.

Is the price right?

CoreWeave is currently trading at a price-to-sales ratio of 5.9. That doesn't seem unreasonable considering how fast the top line is growing. There is some uncertainty, particularly regarding CoreWeave's customer concentration. However, CoreWeave's significant spending could more than pay for itself over the medium term as AI infrastructure spending continues unabated and the company benefits from its massive backlog and long-term contracts.

Will the stock match Wall Street's price target within a year? Maybe not; 63% is a tough ask. However, CoreWeave appears to be an excellent stock to buy and hold over the next five years.

Prosper Junior Bakiny has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.