Investing.com -- Oppenheimer initiated coverage of CoreWeave in a note on Friday with an optimistic outlook, describing the AI-focused cloud provider as a “Gigawatt-Sized Engine for an AI Future.”

Oppenheimer analyst Param Singh started coverage of the company with an Outperform rating and a $140 price target, citing strong long-term growth potential tied to demand for artificial intelligence infrastructure.

According to Oppenheimer, the investment case rests on the rapid expansion of AI computing and the growing need for specialized cloud services tailored to machine learning workloads.

The firm pointed to “the outsized TAM opportunity for AI-optimized IaaS” as a central driver behind its bullish stance, alongside what it sees as CoreWeave’s strong positioning relative to major cloud platforms and emerging competitors.

Oppenheimer also believes the company is well placed to compete with large hyperscale providers as well as other so-called “neo-cloud” operators, thanks to its focus on infrastructure designed specifically for AI workloads.

Investor concerns have recently focused on the company’s elevated capital spending and debt requirements during its expansion phase. However, Oppenheimer argued these worries may be misplaced.

The firm believes “investor concerns with near-term CapEx/debt requirements are short-sighted,” noting that CoreWeave is still in a period of rapid growth and heavy investment.

Looking further ahead, Oppenheimer expects the company’s financial profile to strengthen as expansion moderates. The firm said that as CoreWeave exits its current hyper-growth phase, “cash return should improve and re-rate the stock higher.”

Its valuation model assumes that by 2035, the company’s growth will align more closely with GDP while free cash flow margins normalize above 25%.