AI infrastructure stocks rebounded on Wednesday, with the Nasdaq outperforming other major indexes. CoreWeave reported 168% year-over-year revenue growth, lower-than-expected cash burn and results that topped expectations despite a wider loss. The company also raised its outlook, easing some investor concern about the financing and debt burden of AI data centers. The sector had come under pressure a day earlier after SoftBank disclosed an impairment tied to a US AI data center project and said it would slow its AI investment.
CoreWeave results and outlook support the sector
CoreWeave's quarterly revenue growth exceeded market expectations. Although its loss widened, cash use came in below forecasts, and the company raised its outlook on strong demand. Shares rose more than 20% after the results, while stocks in AI energy, chipmaking and the neocloud sector also advanced.
Rosenblatt said the results addressed key investor questions about CoreWeave's operations and funding. The firm kept its Buy rating and $150 price target, pointing to customer prepayments, short-term financing, cash reserves and operating cash flow as sources of liquidity.
Evercore ISI highlighted the sharp revenue growth and said CoreWeave's momentum remained solid, with operating margins expected to improve. It cut its price target from $150 to $100 but maintained an Outperform rating. Based on Wednesday's share price, the new target still implied roughly 66% upside.
SoftBank impairment weighs on sentiment
SoftBank Group reported an unexpected quarterly loss of about $7.1 billion on Tuesday, including $3.7 billion in impairments on power-generation and data-center equipment. Chief Financial Officer Yoshimitsu Goto said the company planned to slow AI investment after years of aggressive expansion. He also cited a recent sharp decline in equity markets and wider credit spreads. SoftBank's financing costs more than doubled.
The impairment added to concerns over the pace of AI data-center projects, their financing and access to power. SoftBank executives said on the earnings call that the write-downs were linked to changes in procurement channels and a mismatch in the supply chain. The company had previously committed nearly $9.5 billion to secure equipment in advance, amid shortages and long delivery times.
SoftBank shares rose nearly 13% on Wednesday but remained below a key technical support level.
Analysts reset targets for energy and neocloud stocks
JPMorgan cut its price target for GE Vernova by $35 to $1,000 on Wednesday and maintained an Overweight rating. The bank was cautious on electrical equipment and diversified industrial stocks overall, but said AI-related shares could rebound after their recent pullback. It favored companies with greater earnings visibility.
On Monday, Jefferies lowered its price targets for Cipher Mining, Hut 8 and TeraWulf while keeping Buy ratings on all three. The revisions reflected factors including changes in tenant orders. Over the longer term, the firm remained positive on the companies' existing tenant bases and contracted capacity. Hut 8 gained about 3% on Wednesday.
AI energy and chip shares join the rebound
Nebius Group gained nearly 15%, while Bloom Energy rose more than 15%, moving back above its 21-day moving average and breaking above a downward trendline. Among chip stocks, Micron Technology climbed 13% and returned to support near its 200-day moving average. Sandisk advanced more than 15%, and the iShares Semiconductor ETF rose nearly 7%.
IREN, Cipher Digital and Applied Digital each gained about 9%. Wednesday's advance spanned AI computing, energy and semiconductors, while SoftBank's impairment and plans to slow investment kept attention on data-center capital needs, equipment supply and changes in customer orders.