Famed investor Cathie Wood continues to see long-term potential in CoreWeave Inc. (NASDAQ: CRWV) even though the AI infrastructure firm has been cut in half over the past six months.
The founder and chief executive of Ark Investment Management bought another 136,000 CRWV shares this week, split across two of her flagship exchange-traded funds (ETFs).
However, there are ample reasons for retail investors to avoid imitating her stance on CoreWeave stock, which may find it increasingly difficult to recover swiftly in 2026.
The real problem with owning CoreWeave stock
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CRWV stock has tanked sharply in recent sessions after Oracle’s latest earnings release suggested AI investments may fail at delivering an immediate boost to profitability.
But a potential AI slowdown and bubble concerns are really the last of CoreWeave’s concerns heading into 2026.
The primary issue here is its capital-intensive business model that relies heavily on debt financing. Why? Because its operating margin sits at about 4.0% currently, while it borrows at a much higher 7.5%.
What it means is: CoreWeave’s operating margin is far from enough to cover its interest costs. It’s a structural imbalance that raises questions about the sustainability of its current growth strategy.
And it’s not like the AI stock pays a dividend to incentivize taking the risk of owning it for 2026.
What else makes CRWV shares unattractive for 2026
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CoreWeave shares remain unattractive as a long-term holding because of the company’s recently trimmed revenue and operating income guidance as well.
Sure, the management said this was mostly due to delays in building some data centres. However, when you’re trading at unusually stretched valuations, even minor setbacks are and, in fact, should be punished.
And that’s the nature of the problem with owning CRWV. Even after a massive decline since June, it remains priced to perfection – running the risk of continued pressure if top-line slows down or profitability milestones are pushed further back.
In the current environment, investors need a lot more than bullish narratives to load up on the high-flying AI stocks.
How Wall Street recommends playing CoreWeave Inc
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Wood’s ultra constructive stance on CRWV shares is a bit of a head scratcher, given the company’s technicals don’t paint a particularly rosy picture (at least for the near-term) either.
At the time of writing, CoreWeave is trading decisively below its major moving averages (MAs), with a 100-day relative strength index (RSI) at just under 50, reinforcing that the bears aren’t out of juice just yet.
That said, Wall Street firms are more in line with her view on the AI infrastructure giant than what has been discussed above.
According to the Wall Street Journal, the consensus rating on CRWV remains at “overweight” – with the mean target of roughly $125 indicating potential upside of a whopping 40% from here.