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We warned in early March that CoreWeave's IPO, one of the most anticipated public flotation events of the year, faced a growing chorus of headwinds, including moderating GPU prices, data center excess capacity risks courtesy of Microsoft's recent retrenchment in this space, and sustainability concerns around CoreWeave's revenue trajectory. Well, all of these factors are now coming to a head just as the company is about to go public.
For the benefit of those who might not be aware, CoreWeave is a cloud company that specializes in handling GPU-intensive AI workloads. Over the past few years, the company 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. Basically, CoreWeave rents out NVIDIA's latest GPUs, packaged with various bells and whistles designed to attract AI startups.
This brings us to the crux of the matter. Originally, CoreWeave planned to raise at least $4 billion via an IPO that would value the company at $35 billion.
Scoop: CoreWeave is planning to downsize its IPO and cut the price — I'm hearing closer to the $23B valuation it had in the private market a year ago than the ~$30B it wanted.
— Liz Hoffman (@lizrhoffman) March 27, 2025
However, in what amounted to an inauspicious start to CoreWeave's IPO day, Semafor reported earlier today that the company was now targeting a $23 billion valuation.
*COREWEAVE IS SAID PLANNING TO CUT IPO SIZE TO ABOUT $1.5B
Was supposed to be $3BN.
Couldn't fill half the orderbook. This is very bad for revenue roundtripping schemes https://t.co/adSrC6vqjy
— zerohedge (@zerohedge) March 27, 2025
Then, reports emerged that CoreWeave could not manage to fill even half of its orderbook and that the company would now raise just $1.5 billion in its IPO instead of its targeted cash raise of $4 billion.
This IPO is a total disaster: NVDA forced to step in and "anchor" the IPO with a $250MM order at $40 per CNBC
Without NVDA, which already owns 5% of CRWV, IPO would bust https://t.co/GS9rPpneGb
— zerohedge (@zerohedge) March 27, 2025
Next, CNBC is now reporting that the prevailing situation has compelled NVIDIA to step in with a $250 million investment to anchor CoreWeave's IPO at $40 per share.
Of course, TD Cowen's latest note is likely to have played a role in souring the sentiment around CoreWeave's IPO. As a refresher, TD Cowen analyst Michael Elias recently leveraged his channel checks to note that Microsoft's data center lease cancelations are "more pervasive" than previously thought, prompting investors to question the sustainability of the ongoing AI-related CapEx.
Specifically, Elias calculated that Microsoft appears to have walked away - via lease deferrals and outright cancelations - from over 2GW of data center capacity in the US and the EU over the past six months. While Elias concedes that Microsoft's decision not to support OpenAI's training workloads might have partially prompted this retrenchment, he goes on to declare that the prevailing paradigm "points to data center oversupply relative to its current demand forecast." Of course, do note that Google and Meta have stepped forward to reclaim some of Microsoft's recently freed data center capacity.
Bear in mind that 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.
Elsewhere, concerns continue to linger around CoreWeave's revenue and cash burn trajectory. The company burned $1.1 billion in cash in 2023, and a whopping $6 billion in 2024, courtesy of its gigantic CapEx to build out AI infrastructure. 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.
Due to its relentless cash needs, 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. However, with an hour of GPU compute trading at just $2 at the end of 2024 vs. the $8 per hour price tag earlier in the year, some remain concerned about the health of CoreWeave's GPU collateral.
CoreWeave does have one thing going for it: 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 it 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.
