HSBC Projects CoreWeave Investment Returns Below Borrowing Costs

HSBC expects CoreWeave’s AI infrastructure investments to earn less than they cost to finance from 2026 through 2030, raising questions about the value of further expansion.

The bank has a reduce rating on CoreWeave and a $39 share price target. That target is 36% below the stock’s Oct. 19 close.

HSBC analyst Abhishek Shukla projects an average 8.9% return on invested capital over the five-year period, below the company’s borrowing cost. Under that projection, additional investment would cost more to finance than it would earn. Shukla also identified moderating revenue tied to large language models as a concern for specialized AI cloud providers.

CoreWeave shares fell more than 25% last week as investors focused on the borrowing behind its AI expansion. Its bonds traded below 80 cents on the dollar on Oct. 15, with yields approaching 15% that day.

HSBC’s assessment contrasts with Goldman Sachs’ upgrade of CoreWeave, which carried a $106 price target. Goldman argued that investors were overestimating future capital costs and underestimating the potential for investment returns to improve.