CoreWeave, a leading provider of AI data centers, suffered a significant setback shortly before its planned IPO. Microsoft, by far the largest customer with a contract volume of over 10 billion USD until 2030, is withdrawing from several agreements with the cloud provider.
The company is currently preparing for a New York Stock Exchange listing, in which it could raise around 4 billion US dollars and be valued at over 35 billion dollars – the largest tech IPO of the year so far. In its IPO filings, CoreWeave already warned of the risks of a change in demand from Microsoft, which accounted for 62 percent of total sales in 2023.
According to people familiar with the matter, Microsoft criticized delivery problems and missed deadlines by CoreWeave. Although some contracts remain, the strategic partnership has noticeably faltered.
The withdrawal hits CoreWeave at a delicate time. The company achieved revenue of $1.9 billion in 2024 – a massive increase from $229 million the year before – but simultaneously posted a net loss of $863 million. Since 2019, it has evolved from an Ethereum mining company to one of the largest providers of Nvidia-based AI infrastructure. Today, it possesses more than 250,000 Nvidia GPUs, making it one of the major customers of the chip manufacturer.
The financing of CoreWeave is largely based on debt-financed investments: 14.5 billion US dollars were raised through loans and equity, including 5 billion from Blackstone and further interests from Magnetar Capital (20 percent) and Fidelity (8 percent). The three founders - Mike Intrator, Brian Venturo, and Brannin McBee - have each sold shares worth over 150 million dollars since December 2023.
Uncertainty about Microsoft's future data center strategy is growing.
Nevertheless, Microsoft continues to invest aggressively: This fiscal year, 80 billion US dollars are to be invested in expanding its own infrastructure. The company emphasizes that the withdrawal from CoreWeave is independent of its general cloud strategy.
On Wednesday, CoreWeave also announced that it is acquiring the AI development platform Weights and Biases, which was valued at $1.25 billion in 2023 – another step to hedge against market uncertainties.
