So... what exactly does CoreWeave do?
The AI cloud computing company has been a retail trading darling since its recent IPO.
CoreWeave is having a bit of a moment.
It pulled off one of the first major IPOs of the current AI boom we find ourselves in.
It smashed sales expectations for its first reported quarter as a public company, and the company revealed in filings on May 15 that it struck a $4 billion deal with OpenAI — on top of the $12 billion five-year deal it already had in place.
And the biggest AI company of all — Nvidia — owns a stake that looks to be worth nearly $2 billion, along with a partnership that gives CoreWeave priority access to the latest Nvidia chips.
Because the company came onto the scene right as the AI boom was taking off, you’re excused if you aren’t familiar with what its business does exactly.
What is CoreWeave’s business?
The simplest description of CoreWeave is an AI cloud computing company. The company has about 800 employees and has been hoarding Nvidia’s powerful GPUs that every Big Tech and AI company is scrambling to lock down. The company says it has over 250,000 such GPUs in its 33 data centers in the US and Europe, which could be worth between $5 billion and $10 billion.
To dig into what it actually does: The company rents out cloud access to its hoard of the latest Nvidia chips by the hour, set up with very fast networking and preconfigured for the kinds of AI training and inference tasks that are all the rage for anyone working with generative AI.
Even Big Tech companies with their own AI data centers need surge AI computing capacity as demand outpaces the ability to build new data centers. Companies like CoreWeave can fill that gap, as well as provide those services for companies that do not want to lay out massive capex for their own GPUs and infrastructure to support their AI-powered dreams.
CoreWeave customers include Microsoft, Nvidia, and OpenAI.
The company was founded in 2017 as The Atlantic Crypto Corporation, which mined ethereum while acquiring large numbers of GPUs. After the big crypto crash in 2021, it scooped up used GPUs from crypto businesses that went belly-up.
The company found itself in a prime position to pivot to AI when ChatGPT was released, kicking off the current AI boom. It had the chips everyone was scrambling for, and over time developed a close relationship with Nvidia, which sat at the center of the AI infrastructure universe.
Fast and furious fundraising
CoreWeave’s fundraising took off shortly after ChatGPT was released in November 2022. In 2023, the company raised over $1 billion and secured a $2.3 billion loan. To date, the company has raised $3.4 billion, according to data from Pitchbook.
Corporate investors include OpenAI, Cisco, Zoom Ventures, and Nvidia. Magnatar Capital and Blackstone are major partners in CoreWeave’s fundraising.
New filings just revealed that Nvidia has a large stake — 24.2 million shares — that could be worth over $2 billion if it kept the shares it owned as of the end of March. Nvidia helped shore up CoreWeave’s March IPO with a $250 million order.
Risky business?
The company’s S1 filing with the SEC contained some details of what the company looked like pre-IPO and some of the potential risks to its business:
- 100% of CoreWeave’s GPUs were from Nvidia. Everything is dependent on a good relationship with the chipmaker, but these are the chips everyone in the industry is using.
- Microsoft was responsible for 62% of the company’s revenue in 2024. If Microsoft is able to scale its own data centers as CEO Satya Nadella says the company is still doing, or it sees declining demand for its many AI Copilot products, meaning less need for overflow capacity — it could spell trouble for CoreWeave.
- “Substantial indebtedness.” As of the end of 2024, the company had $8 billion of debt on the books due to the expensive capital expenditures related to the business. In 2024, the company spent almost $1 billion on interest payments alone.
The S-1 filing noted:
“We cannot ensure that our business will generate sufficient cash flow from operations or that future borrowings will be available to us in an amount sufficient to enable us to service our debt, to refinance our debt or to fund our other liquidity needs.”
The filing says the collateral for all that debt are the servers, chips, and other assets that are used to build a data center. But the technology cycle for AI hardware is moving very fast, and the value of those assets could depreciate quickly.
This month, CoreWeave CEO Michael Intrator told CNBC in an interview that the company has significant bookings that will cover the large capital expenditures it is planning, as well as the significant debt payments:
“Yes. We are going to invest $19 billion. We are going to invest $21 to $23 billion. On the other hand, we have executed contracts for in excess of $29 billion. That is offsetting that. And so you can see, within the contract terms, you have the ability to build, to run, and to be in a position to repay all of the debt with a significant amount of excess revenue that shows up.”
The very first quarter
CoreWeave’s Q1 results gave us a look at how the newly public company is doing since raising $1.4 billion in its March IPO. It had a strong debut, blowing past earnings estimates with $982 million in revenue — up 420% year on year — along with a substantial backlog of booked sales, including that new $4 billion deal with OpenAI.
Losses more than doubled to $314 million, in part because of IPO-related stock-based compensation expenses.
The company said it plans to spend a whopping $20 billion to $23 billion in capex this year alone.
CoreWeave did not respond to a request for comment.
