Cloud computing provider CoreWeave is preparing to go public, aiming to raise up to $2.7 billion in an IPO that could value the company at up to $32 billion. However, as AI hardware evolves and major tech firms rethink their reliance on third-party infrastructure, CoreWeave’s long-term sustainability is being called into question.
While a $11.9 billion deal with OpenAI provides immediate financial stability, the company’s dependency on Nvidia GPUs and a shifting cloud market could present challenges that investors must weigh carefully.
The company is navigating an AI landscape that is evolving at breakneck speed. Microsoft, which once accounted for 62% of CoreWeave’s revenue, has pulled back, opting to build its own AI infrastructure instead. Meanwhile, CoreWeave’s reliance on Nvidia’s soon-to-be-outdated Hopper-based GPUs raises questions about its ability to remain competitive in a rapidly changing market.
Microsoft Drops CoreWeave, OpenAI Steps In—But Is That Enough?
Microsoft’s decision not to exercise a $12 billion contract option with CoreWeave has put pressure on the company’s revenue streams. Reports highlighted that Microsoft’s withdrawal stemmed from concerns about CoreWeave’s delivery issues and missed deadlines, which CoreWeave has denied. In a statement to Winbuzzer, the company insisted:
“We pride ourselves in our client partnerships and there have been no contract cancellations or walking away from commitments. Any claim to the contrary is false and misleading.”
As Microsoft stepped away, OpenAI secured a five-year, $11.9 billion contract with CoreWeave to expand its computing infrastructure. Additionally, OpenAI is acquiring $350 million in CoreWeave shares through a private placement tied to the IPO, further solidifying its reliance on the company’s cloud services. However, OpenAI itself is moving toward diversifying its compute options, including exploring partnerships beyond Microsoft Azure.
Nvidia’s GPUs and the Risk of Depreciation
CoreWeave’s infrastructure is built around Nvidia’s Hopper-based GPUs, but the market is shifting toward newer, more efficient hardware. Nvidia’s new Blackwell GPUs promise significant performance improvements, but supply chain bottlenecks and reported design flaws have delayed their rollout.
While CoreWeave plans to transition to the new generation of chips, the broader market trend is concerning. Microsoft, Google, and Amazon are investing in in-house AI chips, reducing their dependence on Nvidia-based infrastructure. If more companies follow suit, CoreWeave could face difficulty securing long-term contracts.
Financial Concerns: Can CoreWeave Sustain Its Growth?
Despite rapid revenue growth—rising from $228.9 million in 2023 to $1.92 billion in 2024—CoreWeave remains unprofitable. The company posted a net loss of $863 million last year.
CoreWeave has also taken on substantial debt to fund expansion. It secured a $7.5 billion financing package led by Blackstone, but that debt carries significant obligations—CoreWeave must repay nearly $7.5 billion by the end of next year. This debt burden could weigh heavily on investor confidence as the company heads toward its IPO.
Additionally, CoreWeave’s IPO filing reveals that 77% of its 2024 revenue came from just two companies—Microsoft and Nvidia. Even with OpenAI stepping in, such heavy dependence on a few major customers represents a key risk.
Can CoreWeave Stay Relevant?
CoreWeave’s IPO is a pivotal moment for the company and the AI cloud computing industry. Investors must weigh its rapid revenue growth against its hardware dependencies, customer concentration, and financial risks. While it remains a major player in AI infrastructure, the increasing shift toward in-house AI chips among big tech firms could change the game.
For now, the question remains: Can CoreWeave adapt fast enough, or will its business model struggle to keep pace with an industry that is evolving faster than ever?
