CoreWeave, a cloud-computing startup backed by Nvidia, priced its highly anticipated initial public offering (IPO) lower than expected on Thursday, reflecting weaker investor appetite for AI infrastructure stocks.
The company’s shares will begin trading on the Nasdaq under the ticker symbol “CRWV” on Friday.
CoreWeave sold 37.5 million shares at $40 each, raising $1.5 billion and valuing the company at $20 billion. This is significantly lower than the original plan to offer 49 million shares at a price range of $47 to $55, which could have raised up to $2.7 billion. The pricing cut aligns with earlier reports that the IPO would be downsized due to weaker demand in the AI sector.
Nvidia, which already owns 6% of CoreWeave, reportedly anchored the IPO with a $250 million investment at the offering price of $40 per share.
The CoreWeave IPO was seen as a test for investor confidence in AI-related infrastructure companies. However, concerns over data center spending trends and competition from low-cost AI models in China have led to uncertainty in the sector. Chinese tech firms, including Alibaba and DeepSeek, have launched affordable AI models, raising concerns that AI hardware demand could slow down.
Additionally, Microsoft, CoreWeave’s largest customer, accounting for 62% of its 2024 revenue, has reportedly scaled back some AI data center plans. Another 15% of CoreWeave’s revenue came from Nvidia, highlighting a concentration of business from a few major partners.
CoreWeave reported a massive revenue jump of 700% in 2024, reaching $1.92 billion, but also recorded a net loss of $863.4 million. The company holds about $8 billion in debt and leases its 32 data centers, leading to $2.6 billion in operating lease liabilities.
According to its IPO filing, CoreWeave plans to use about $1 billion of the proceeds to pay down its debt but will continue to rely on borrowed funds for expansion.
Despite the ongoing AI boom, concerns about uneven investment in AI data centers and growing losses have made investors more cautious about unprofitable tech startups. Nvidia’s stock, which initially gained early Friday, fell 2.05% on Thursday, reflecting broader market concerns about AI-related investments.
CoreWeave has secured major partnerships, including a recent $11.9 billion infrastructure deal with OpenAI, the creator of ChatGPT. As part of the IPO, OpenAI will acquire $350 million worth of CoreWeave shares in a private placement.
With input from Investor’s Business Daily, Reuters, and Axios.
