CoreWeave IPO Tests Investor Appetite for AI Deals, Raises Less Than Expected

CoreWeave, an AI-focused cloud company that generates all of its revenue from cloud rentals of AI servers powered by Nvidia chips, raised $1.5 billion in its initial public offering—significantly less than expected—at $40 per share.

Coreweave's revenue skyrocketed from $16 million in 2022—the year ChatGPT was launched—to $1.9 billion in 2024. I Photo: Nasdaq Facebook

The IPO was viewed as a test of investor appetite for new deals, Adam Levine and Janet H. Cho reported for Barron’s Daily.

The stock is expected to begin trading today on Nasdaq. Initially, the company had targeted a sale of 49 million shares at a price range of $47 to $55 each, aiming to raise up to $2.7 billion.

CNBC reported that Nvidia was expected to be an anchor investor in the IPO.

Founded in 2017 as a cryptocurrency miner, CoreWeave shifted its focus to AI cloud services following the 2018 crypto market collapse. The company’s revenue skyrocketed from $16 million in 2022—the year ChatGPT was launched—to $1.9 billion in 2024.

Microsoft accounted for 62% of CoreWeave’s 2024 revenue, while Nvidia is believed to be another major customer. The company has also secured a deal with AI chatbot maker OpenAI worth up to $11.6 billion, though specific terms were not disclosed.

Excluding that contract, CoreWeave’s backlog stood at $15 billion at the end of 2024, with $8 billion set to be fulfilled in 2025 and 2026.

However, customer concentration poses a risk. CoreWeave had over $12 billion in outstanding loans at the end of 2024, and its $361 million in interest expenses for the year exceeded its $324 million operating profit.

Given its capital-intensive business model, the company is expected to increase its borrowing further.

Approximately $5.6 billion of its debt must be repaid in 2025 and 2026. Some IPO proceeds will be used to address this, with $1 billion allocated to pay off a 12% interest loan due by the end of the year.