CoreWeave's Growth Potential Amid AI Stock Rebalancing

CoreWeave stands out in AI as hedge fund Altimeter trims major holdings. Nvidia's risks loom, while CoreWeave shows promise. Should investors seize this opportunity?

Date: 06-06-2025

AI Rating: 6

**Investment Update on Nvidia, Micron, Taiwan Semi, and CoreWeave**
Altimeter Capital, led by Brad Gerstner, is reshaping its portfolio, notably selling Nvidia, Micron, and Taiwan Semiconductor Manufacturing, while favoring CoreWeave. The hedge fund's 13F filing reveals significant moves that bear scrutiny.

Regarding **Nvidia**, it dominates the data center GPU market, but its reliance on large cloud customers could be problematic. With major players like Amazon, Alphabet, and Microsoft developing their AI chips, there's a risk of customers migrating away from Nvidia. Moreover, Nvidia faces challenges from regulatory exposure to China, where new export controls might impact its sales growth. For **Micron**, specializing in memory storage chips, the business faces commoditization, hindering its competitive edge in the AI infrastructure domain. As cloud-based AI systems evolve, Micron’s hardware-focused strategy may not sustain growth. **Taiwan Semiconductor Manufacturing**, as a major fabricator, is also influenced by Nvidia’s fluctuating demand. Geopolitical pressures, notably the Taiwan-China relationship, can impact its operational stability due to potential shifts from chip designs seeking alternative sources like Intel.

On the other hand, **CoreWeave** presents a contrasting strategy. With an agile cloud computing model leveraging Nvidia’s GPUs, it capitalizes on AI training and inferencing, positioning itself uniquely in the booming AI landscape. This lean operation allows it to adapt quickly to market demands compared to its chip manufacturing counterparts.

Despite recent valuation increases for CoreWeave, caution is warranted given its current cash burn rate and the disparity in its price-to-sales ratio when compared to mature competitors like Oracle. Investors must weigh whether CoreWeave's revolutionary approach justifies the valuation surge against potential profitability risks.

Stocks: NVDA MU TSM CRWV