Data centre operator CoreWeave is preparing to file for an initial public offering as early as next week that would value the company at more than $35bn and is expected to be one of the biggest artificial intelligence listings of the year.
The New Jersey-based start-up is aiming to raise $4bn from the IPO. A former cryptocurrency mining operation, it was an early and prolific buyer of Nvidia’s graphics processing units (GPUs), with about 300,000 of the chips that are now the world’s hottest commodity for powering AI models.
CoreWeave executives have begun meetings with investors this week to test the water on appetite for its IPO, according to people close to the process. Morgan Stanley, Goldman Sachs and JPMorgan are advising on the deal. The people said details and the timing of the IPO plan were still subject to change. CoreWeave declined to comment.
The listing will be closely watched by tech companies and their investors who have put IPO plans on hold due to political and market uncertainty in the past two years. However, investors in CoreWeave’s IPO will have to grapple with challenges to its business ranging from a substantial debt load to a shift in spending on AI infrastructure by its largest customer, Microsoft, which contributes more than half of total revenue.
Microsoft will spend more than $10bn on CoreWeave services by 2030 under five contracts between the two companies, according to people close to the company. Oracle and Meta have also done deals with CoreWeave to license its computing power.
But industry observers say Microsoft’s data centre strategy may be changing after it ended an exclusivity deal with OpenAI on leasing its computing power, raising questions about its relationships with data centre operators such as CoreWeave.
TD Cowen analysts published a report last week saying Microsoft withdrew from two data centre leasing agreements, citing “channel checks” or inquiries with supply chain providers. Meanwhile, Microsoft chief executive Satya Nadella said in an interview earlier this month that there was an “overbuild” of AI infrastructure.
“Microsoft’s data centre strategy has changed in the context of its divorce settlement with OpenAI,” said one investor in CoreWeave. “There are some questions about prospective contracts. Where is the next big contract coming from. and is it imminent in the context of Microsoft unwinding data centre contracts?”
In a statement in response to the Cowen report, Microsoft said its infrastructure spending plans remained on track.
CoreWeave revenues surged to about $2bn in 2024, from about $200mn a year earlier, and $25mn in 2022, according to people with knowledge of the company’s finances. It has raised approximately $11bn of debt and $2bn of equity, pioneering a flurry of asset-backed lending by Wall Street into a burgeoning industry of cloud computing providers known as “neoclouds”, which lease GPU capacity to tech companies building AI models.
Magnetar Capital, which owns about 20 per cent of CoreWeave, will be among the biggest winners of the IPO, with a stake worth as much as $7bn. The Illinois-based hedge fund, which shot to prominence in the wake of the global financial crisis for its lucrative bets on mortgage securities, was CoreWeave’s first institutional backer, providing $50mn of capital in 2021 and investing in subsequent funding rounds.
CoreWeave’s other equity investors include Nvidia, Coatue Management, Jane Street, Fidelity and Lykos Global Management. Nvidia owns less than 5 per cent of the company, according to a person close to the matter.
The bulk of its debt financing has been led by Blackstone, Magnetar and Coatue. Blackstone has loaned about $5bn to the business, according to a person close to the matter. Other lenders include Carlyle, DigitalBridge and BlackRock. CoreWeave also secured a $650mn credit facility with JPMorgan, Goldman Sachs and Morgan Stanley in October last year. The debts are secured against CoreWeave’s stock of Nvidia GPUs.
CoreWeave was founded under the name Atlantic Crypto in 2017 by commodities traders Mike Intrator, Brian Venturo and Brannin McBee to mine the cryptocurrency ethereum, before pivoting to AI in 2019.