The fastest-growing AI cloud, supported by NVIDIA, is Coreweave secretly filing this week?
According to The Information, CoreWeave will officially go public in April next year. The company's valuation has now ballooned to $23 billion. As an AI cloud platform supported by NVIDIA, CoreWeave is known for its "GPU scalper" model, with revenue heavily reliant on Microsoft
This Tuesday, according to a report by overseas technology media The Information, the AI cloud platform CoreWeave, supported by NVIDIA, has secretly submitted its IPO prospectus this week, with the company expected to officially go public in April next year. The company has hired Morgan Stanley, Goldman Sachs, and JP Morgan to handle the IPO matters.
Headquartered in New Jersey, CoreWeave was founded in 2017 and initially started as a cryptocurrency mining company before venturing into the cloud computing services sector. Its investors include NVIDIA, hedge fund Magnetar Capital, Blackstone, and Coatue.
As a new competitor to cloud computing giant Amazon, CoreWeave rents out computer servers equipped with NVIDIA chips to AI application developers. When NVIDIA invested $100 million in CoreWeave at the beginning of 2023, the company's valuation was only $20. However, in a recent round of financing, this figure has soared to $23 billion.
Deutsche Bank analyst David Folkerts-Landau commented:
The potential IPO of CoreWeave is as eye-catching as an oasis in the desert.
Over the past two years, the IPO channel in the U.S. has basically dried up, with very few tech IPOs. CoreWeave's IPO next year may end this drought.
Revenue Highly Dependent on Microsoft
Microsoft is currently CoreWeave's largest customer. Due to the capacity limitations of its data centers in meeting OpenAI's computing needs, Microsoft has turned to CoreWeave as an AI infrastructure provider.
In terms of revenue, CoreWeave expects to generate approximately $2 billion in revenue in 2024, with revenue projected to quadruple to $8 billion in 2025. The company also stated that it will achieve positive net profit in the near future.
Regarding data centers, CoreWeave aims to establish its AI infrastructure in 20 data centers by the end of this year, including its own data centers and those operated by companies like Equinix and Digital Realty.
NVIDIA Diversifies Risks
CoreWeave's success helps NVIDIA diversify its operational risks.
Currently, NVIDIA's largest AI chip customers are Amazon, Microsoft, and Alphabet, the parent company of Google. However, Amazon and Google have already developed their own AI accelerator chips to reduce reliance on NVIDIA.
External analysis suggests that secondary cloud GPU providers like CoreWeave will facilitate NVIDIA in better controlling the deployment of its GPUs in the market, thereby reducing risks from major customers.
How Far Can the "GPU Scalper" Model Go?
However, CoreWeave's success is not without risks. The company's success is highly dependent on the scarcity of NVIDIA AI chips. CoreWeave has raised over $10 billion in debt financing from lenders such as Blackstone and hedge fund Magnetar Capital over the past 12 months. This debt is secured by the NVIDIA GPU inventory held by the company, and the funds raised are used to purchase more chips. This massive financing also means that CoreWeave has a very high leverage ratio.
However, as the AI chip supply chain improves, the prices of NVIDIA GPUs in CoreWeave's possession have also begun to decline. Some investors are concerned that as new advanced GPU versions are released, or as tech giants' current high spending on artificial intelligence starts to contract, the ongoing value of these "loan collateral" chips will be called into question, and CoreWeave's "GPU scalper" business model may come to an end