CoreWeave’s stock is now up 65% since its flat trading debut on Friday. Analysts note it has a smaller float that can make it prone to volatile swings.

CoreWeave’s stock is taking off after its initial IPO disappointment

Shares of CoreWeave Inc., the artificial-intelligence-focused data-center operator, continued to gain steam on Wednesday, reflecting how several factors make the newly public name prone to volatile moves.

CoreWeave’s stock gained 17% on Wednesday, and is now up 65% since closing at $40 on Friday. That Friday close was flat with the company’s initial-public-offering price, in what was seen as a disappointing deal.

Santosh Rao, head of research at Manhattan Venture Partners, said the main factors contributing to CoreWeave’s volatility include the smaller size of its stock float, the potential for a short squeeze and speculation about the possible impact of tariffs on the broader market. At the same time, he said, some may continue to wonder whether “AI has run its course.”

Rao himself is more positive about the overall need for AI computing power. “I believe the fundamental demand for high-performance chips remains and CoreWeave is well positioned to benefit,” he said in an email. Manhattan Venture Partners is a principal investor and adviser specializing in the secondary market for private-venture-backed tech companies.

The large number of investment banks that were underwriters in the CoreWeave offering won’t be issuing any coverage of the company for a few weeks. D.A. Davidson analyst Gil Luria was the lone analyst to initiate coverage of CoreWeave last week with a neutral rating. But on Monday he lowered his price target to $36 from $47, citing heightened concerns about the company’s high debt levels and other issues.

Luria said he had received a lot of investor feedback on his initiation report. He noted that while he and his team have a strong conviction that AI is a transformative technology that will drive productivity gains across the economy, they believe that should “allow us not to recommend every participant in the AI ecosystem, but rather try to be more selective.”

The news that Nvidia Corp. reportedly invested $250 million to help support CoreWeave’s stock at the time of the IPO was further evidence for his view that CoreWeave looks like a special-purpose vehicle for Nvidia — “an off-balance-sheet arrangement to amplify [a] $350 million investment into a $10 billion customer,” Luria wrote.

Luria also mentioned the float as a factor in the stock’s volatility. He told MarketWatch in an email that he expects CoreWeave, in its first few days of trading, to be added to various AI-stock baskets, which are prominent right now.

“Given the very small float, any additions to demand can create large swings in the share price,” he said.

The company also issued a press release on Tuesday with results of its cloud services running Nvidia’s Blackwell platform running AI inference, setting what it said is a new industry benchmark on Llama 3.1, one of the largest open-source models.