CoreWeave Inks $11.9 Billion Contract With OpenAI Ahead of IPO

New York: CoreWeave, a startup in artificial intelligence supported by Nvidia (NVDA.O), has secured an $11.9 billion, five-year agreement with OpenAI before its eagerly awaited stock market debut. CoreWeave announced on Monday that, as part of the agreement, it will supply AI infrastructure to OpenAI, validating a prior exclusive report from Reuters. The agreement will provide OpenAI with an ownership interest in CoreWeave, which plans to offer shares valued at $350 million to the ChatGPT developer via a private placement during its IPO. CoreWeave, an AI startup based in Livingston, New Jersey, regarded as one of the most promising in the U.S., will not gain any revenue from the share issuance to OpenAI.

CoreWeave secures $11.9B OpenAI deal

"CoreWeave significantly enhances OpenAI's infrastructure collection, supporting our commercial agreements with Microsoft and Oracle, as well as our partnership with SoftBank on Stargate," stated Sam Altman, CEO of OpenAI. The agreement significantly enhances CoreWeave's position before its major share offering, projected to be a key highlight of the U.S. IPO scheduled for 2025. Conversations with OpenAI arise during a period when investor enthusiasm for generative AI is rapidly increasing. The AI surge, which has fueled companies like Nvidia and other major tech players, has led to a spike in worldwide demand for infrastructure like data centres and high-performance servers.

A triumphant IPO for CoreWeave might open doors for other AI startups that have lately thought about entering public markets. Data centre operator Switch has been considering an IPO with a valuation nearing $40 billion, including debt, as Reuters reported last year. Established in 2017, CoreWeave offers access to data centres and powerful chips for AI tasks, primarily sourced from Nvidia. CoreWeave, which has major clients such as Meta (META.O), opens a new tab, IBM (IBM.N) opens a new tab, and Microsoft (MSFT.O), which opens a new tab, is anticipated to aim for a valuation exceeding $35 billion in its upcoming stock market debut, according to a Reuters report from November.

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In its IPO submission earlier in March, CoreWeave announced revenue of $1.92 billion for 2024, contrasting with $228.9 million the previous year. Its net loss increased to $863.4 million for that same period, up from $593.7 million in 2023. Approximately two-thirds of its income was generated from Microsoft, the company's largest customer. CoreWeave has secured over $14.5 billion through debt and equity in 12 funding rounds, according to information gathered by Reuters. Last year, CoreWeave secured more than $7 billion in one of the largest private debt financing rounds ever, spearheaded by asset managers Blackstone (BX.N) and Magnetar. Morgan Stanley, JPMorgan Chase, and Goldman Sachs are the main underwriters for CoreWeave's forthcoming stock market launch. CoreWeave's stock is anticipated to be listed on the Nasdaq with the ticker symbol CRWV.