OpenAI has entered into a five-year, $11.9 billion agreement with CoreWeave, a cloud computing provider specializing in GPU-accelerated services. This strategic partnership aims to expand OpenAI’s computational resources while also strengthening CoreWeave’s market position as it prepares for its initial public offering (IPO).
The move is seen as a critical counterbalance to reports about a Microsoft decision from Microsoft to scale back its commitments with CoreWeave.
OpenAI Investment Would Offset A Retreat from Microsoft
Microsoft, once CoreWeave’s largest client, has reportedly reduced its commitments, citing delivery challenges and shifting infrastructure strategies, which CoreWeave denied. This alleged withdrawal could posed financial risks for CoreWeave, which previously relied on Microsoft for 62% of its revenue in 2024.
Microsoft’s retreat – if true – would be in line with its broader shift towards in-house AI chip development and optimizing its own cloud infrastructure, including the cancellation of multiple AI data center leases. The company refuted reports about a withdrawal from Microsoft, saying “there have been no contract cancellations or walking away from commitments. Any claim to the contrary is false and misleading.”
The reduced financial inflow from Microsoft could created a significant gap in CoreWeave’s revenue stream, amplifying concerns about the company’s financial stability ahead of its planned IPO.
OpenAI’s massive investment will not only helps to fill any gap left by Microsoft but also enhances CoreWeave’s credibility with potential investors. As part of the deal, OpenAI will acquire $350 million worth of CoreWeave shares, a move that signals strong confidence in the provider’s AI infrastructure capabilities and long-term viability.
CoreWeave’s Evolution and Strategic Positioning
CoreWeave, established in 2017, transitioned from cryptocurrency mining to becoming a leading provider of GPU-accelerated cloud services. The company operates over 250,000 Nvidia GPUs across 32 data centers, supporting clients like Meta, IBM, and, until recently, Microsoft.
CoreWeave reported revenues of $1.92 billion in 2024, a 737% year-over-year increase, though it also posted a net loss of $863.4 million due to rapid scaling costs. The OpenAI partnership is expected to strengthen its IPO outlook, helping to secure a target raise of $4 billion.
OpenAI’s Infrastructure Diversification and SoftBank’s Influence
OpenAI’s strategic move to partner with CoreWeave aligns with its broader efforts to diversify its cloud infrastructure.
This diversification became more prominent after SoftBank invested $40 billion in OpenAI, supporting initiatives to reduce dependence on Microsoft Azure. The collaboration is part of OpenAI’s longer-term strategy to secure stable, scalable compute resources, ensuring consistent AI model development and deployment.
Moreover, OpenAI is actively participating in the U.S.-backed Stargate Project, which aims to strengthen domestic AI infrastructure by 2029. The project is designed to mitigate risks associated with foreign-controlled infrastructure, emphasizing national security and operational autonomy.
Nvidia’s Role and Technological Challenges
Nvidia, a critical partner for CoreWeave, faced production setbacks in 2024 due to design flaws in its Blackwell B200 GPUs. The defect, discovered by manufacturing partner TSMC, led to production delays, impacting delivery timelines for clients like Microsoft and Meta.
Nvidia CEO Jensen Huang confirmed that the issue was resolved through a mask change, allowing the company to move forward with mass production in late 2024. These delays, however, exposed the vulnerabilities in CoreWeave’s supply chain, emphasizing the importance of securing diverse hardware solutions.
SoftBank’s influence, particularly its stake in ARM Holdings, may help OpenAI and CoreWeave explore alternative hardware options. This shift could reduce long-term reliance on Nvidia’s GPU supply, providing greater flexibility amid increasing demand for AI processing power.
Market Dynamics and Industry Outlook
The AI cloud infrastructure sector is rapidly evolving, with companies like Amazon, Google, and Microsoft investing heavily in proprietary hardware solutions. Microsoft’s partnership with AMD for AI chip development reflects this strategic shift, posing additional competition for specialized providers like CoreWeave.
CoreWeave’s focus on GPU-powered infrastructure remains a strength, but long-term sustainability will require greater diversification in hardware partnerships and client bases. The company’s reliance on Nvidia and large clients like Microsoft has exposed it to market fluctuations, but OpenAI’s investment offers a strategic cushion against these risks.
For OpenAI, the partnership reflects a calculated strategy to secure scalable infrastructure and reduce future constraints in model development.
As the sector grows, the interplay between AI developers, hardware manufacturers, and infrastructure providers will shape the competitive landscape. CoreWeave’s ability to navigate these dynamics and strengthen its infrastructure capabilities will be critical in determining its long-term success.
