CoreWeave, a prominent AI startup, has signed a monumental five-year contract worth $11.9 billion with OpenAI, just ahead of its highly anticipated initial public offering (IPO). This strategic partnership is set to enhance OpenAI's infrastructure capabilities while positioning CoreWeave for a significant market debut.
Key Takeaways
CoreWeave will provide AI infrastructure to OpenAI under a five-year contract valued at $11.9 billion.
OpenAI will acquire $350 million in CoreWeave shares through a private placement during the IPO.
CoreWeave aims for a valuation exceeding $35 billion in its upcoming stock market listing.
The company reported a revenue surge to $1.92 billion in 2024, despite a widening net loss of $863.4 million.
Overview Of The Deal
The agreement between CoreWeave and OpenAI marks a significant milestone in the AI sector, reflecting the growing demand for robust computing resources. OpenAI's CEO, Sam Altman, highlighted the importance of this partnership, stating that it complements existing collaborations with tech giants like Microsoft and Oracle.
As part of the deal, OpenAI will receive a stake in CoreWeave, which will issue shares worth $350 million during its IPO. Notably, CoreWeave will not benefit from the proceeds of this share issuance, indicating a strategic move to solidify its relationship with OpenAI.
CoreWeave's Growth Trajectory
Founded in 2017, CoreWeave initially focused on cryptocurrency mining but pivoted to providing specialised AI infrastructure in 2019. The company has rapidly expanded its operations, now boasting over 250,000 Nvidia AI GPUs, making it one of Nvidia's largest customers.
In its recent IPO filing, CoreWeave reported impressive financial growth:
Revenue: $1.92 billion in 2024, up from $228.9 million in 2023.
Net Loss: Increased to $863.4 million from $593.7 million in the previous year.
Approximately two-thirds of CoreWeave's revenue is derived from its largest customer, Microsoft, underscoring the company's reliance on major tech partnerships.
Implications For The AI Sector
The deal comes at a time when investor interest in generative AI is surging, driven by the increasing demand for data centres and high-powered servers. A successful IPO for CoreWeave could pave the way for other AI startups considering public offerings, potentially reshaping the landscape of the tech industry.
CoreWeave's upcoming IPO is expected to be a marquee event in the U.S. stock market, with Morgan Stanley, JPMorgan Chase, and Goldman Sachs serving as lead underwriters. The shares are anticipated to trade on the Nasdaq under the symbol CRWV.
Conclusion
The partnership between CoreWeave and OpenAI not only signifies a major step for both companies but also highlights the evolving dynamics of the AI infrastructure market. As CoreWeave prepares for its IPO, the implications of this deal could resonate throughout the tech industry, setting a precedent for future collaborations and investments in AI technology.
Sources
CoreWeave strikes $12 billion contract with OpenAI ahead of IPO, sources say -March 10, 2025 at 02:31 pm EDT, MarketScreener.
CoreWeave inks $11.9 billion contract with OpenAI ahead of IPO, Reuters.