CoreWeave (CRWV) is pushing back on fears of overbuilt AI infrastructure and a bubble in the sector.
“Not that we see,” CoreWeave co-founder Brannin McBee told Yahoo Finance today about whether customers are getting worried about the pace of investment in artificial intelligence. “And this discussion of an AI bubble — we don’t understand it.”
CoreWeave priced its initial public offering (IPO) at $40 a share Thursday night. The cloud play initially expected to sell shares in the range of $47 to $55, but concerns about the pace of AI spending and CoreWeave’s business model caused it to downsize the offering.
At close: March 28 at 4:00:00 PM EDT
The company raised $1.5 billion for a valuation of $23 billion on a fully diluted basis. It planned to raise $4 billion at a valuation of $35 billion.
CoreWeave’s stock fell as much as 5.8% after shares opened for trading on the Nasdaq at around 1:15 p.m. ET.
While SailPoint (SAIL) kicked off the year for buzzy tech IPOs with an AI bent, CoreWeave is the biggest name to drop so far.
CoreWeave was founded as a crypto miner in 2017 by Michael Intrator, Brian Venturo, and McBee, who largely have energy industry backgrounds.
The company took a $100 million investment and $320 million contract from Nvidia (NVDA) and a multiyear deal with Microsoft (MSFT) to raise $1.6 billion in equity and $12.9 billion in debt commitments. This allowed CoreWeave to purchase 250,000 GPUs from Nvidia, or about $10 billion worth.
Today, the company provides access to data centers and high-powered chips for AI workloads. It competes with cloud providers like Microsoft and Amazon (AMZN).
The company has seen its valuation skyrocket as its technology has been tapped to build out AI infrastructure.
Ahead of its IPO on Friday, CoreWeave was among the top 10 highest-valued private companies, according to Yahoo Finance data. The company’s valuation in private markets had surged 796% over the past 52 weeks.
Financial results have been solid for an early-stage tech player.
Sales last year rose to $1.9 billion from $228 million in 2023. Adjusted operating profits increased to $1.2 billion from $103 million in 2023.
But CoreWeave is not without a few risks staring down investors.
Concerns linger about CoreWeave using large amounts of debt to fund purchases of a depreciating asset in AI chips. The company has raised $14.9 billion in debt and equity across 12 financings to buy chips and then build data centers.
It spent $941 million to service its debt in 2024, according to the company’s S-1 filing.
In addition, OpenAI has committed $11.9 billion in orders to CoreWeave. If the large language model builder can’t raise enough money to support its growth ambitions, CoreWeave could see order cancellations. Currently, Microsoft accounts for 62% of CoreWeave’s sales.
