This is not investment advice. The author has no position in any of the stocks mentioned. Wccftech.com has a disclosure and ethics policy.
CoreWeave (CRWV), a cloud company that specializes in handling GPU-intensive AI workloads, is expected to deliver one of the most highly anticipated public market flotation events of 2025. Yet, the company's IPO faces a growing chorus of challenges.
For the benefit of those who might not be aware, CoreWeave has carved out for itself a winning niche: it has created a unique partnership with NVIDIA to be among the first to offer access to NVIDIA's latest-gen GPUs at scale, all packaged within an infrastructure that has been optimized to handle AI workloads, replete with "sub-microsecond" network latency and an effective GPU lifecycle management system.
As of the end of 2024, CoreWeave housed over 250,000 GPUs from NVIDIA across its 32 data centers, with the Hopper architecture constituting the vast majority of these GPUs.
In the age of generative AI, CoreWeave's strategy has been an obvious hit. Consider the fact that its 2024 revenue increased by 737 percent year-over-year to $1.92 billion from just $229 million in revenue that the company recorded in 2023. Nonetheless, the company has yet to show a profit, having reported a net loss of $863 million in 2024, and $594 million in 2023.
CoreWeave has raised $14.5 billion in financing via 12 funding rounds. It currently has a debt load of around $11 billion. Critically, most of CoreWeave's debt stock is secured against its gigantic stash of NVIDIA GPUs. For its part, NVIDIA has taken a $100 million stake (1 percent) in the startup.
CoreWeave is planning to raise at least $4 billion via an IPO that would value the company at over $35 billion.
This brings us to the crux of the matter. CoreWeave's IPO entails a growing number of risks. For instance, GPU prices continue to moderate as supply expands, leading to inherent risks for CoreWeave's GPU-backed debt load. According to Financial Times, an hour of GPU compute traded at around $2 towards the end of 2024, down significantly from the $8 per hour price tag earlier in 2024.
What's more, Microsoft was responsible for 62 percent of CoreWeave's revenue in 2024. And, the tech giant previously intended to spend over $10 billion on CoreWeave's services by 2030. However, recently, Microsoft walked away from some of its purchase commitments with CoreWeave, citing delivery issues and missed deadlines.
Then there are sustainability concerns around CoreWeave's revenue trajectory. When NVIDIA's GPUs were in short supply, hyperscalers like Microsoft were happy to contract with CoreWeave. However, the supply of NVIDIA's GPUs is rapidly scaling up. Concurrently, most of these hyperscalers are building their own data center infrastructure. Under the emerging paradigm, CoreWeave might eventually be left with smaller AI-focused startups who can't afford to splurge billions of dollars on carving out a bespoke network of data centers. These customers, however, will not entail the fat margins that CoreWeave typically extracts from its hyperscaler customers.
CoreWeave executives and VCs realizing that if they hadn't procrastinated and filed their IPO 2 months ago they could have nailed the top and wouldn't have to cut the price in half like they will have to do to get this thing out the door now... đź’€ $CRWV https://t.co/k5pCbgGb4r pic.twitter.com/r8PX12MPEt
— MajorTom (@HFMajorTom) March 4, 2025
Finally, CoreWeave seems to have chosen an inopportune time to go public. After all, the market is currently fretting over a renewed trade war under the Trump administration 2.0, increased geographical restrictions on NVIDIA's GPUs, and the efficiency-driven gains of China's AI startups like DeepSeek.
This is not to say that CoreWeave won't constitute a compelling investment case. After all, the company has just spent $1.7 billion to acquire Weights & Biases, a company that offers specialized platforms to build, train, and fine-tune AI models and applications. This acquisition would increase the convenience and linearity that CoreWeave offers to all AI-focused startups. Nonetheless, Microsoft's scaling down of its existing commitments could herald a broader change for CoreWeave, marring its investment thesis and dulling some of its patina.
