Google Leases AI Servers from CoreWeave Amid GPU Shortage

Google is reportedly in advanced negotiations with CoreWeave to lease AI servers equipped with the latest nvidia Blackwell chips. This move comes as google faces a shortage of GPU resources, a critical component for powering its AI and cloud services. The tech giant has already placed an order for over $100 billion worth of Blackwell chips and has been supplying these to specific clients since February. However, leasing additional GPU resources from CoreWeave will allow Google to expand its offerings to a broader range of cloud customers, including Anthropic, apple, Character AI, and GitLab.

In addition to leasing GPU resources, Google is also in preliminary discussions with CoreWeave to rent data center space. This space would be used to install Google's own Tensor Processing Units (TPUs), further highlighting the company's need for additional data center capacity. CoreWeave operates a large data center in Denton, Texas, which is currently being used by Microsoft. While it is unclear if Google has similar arrangements with other data center providers, these actions indicate that Google is facing challenges not only in securing sufficient GPU resources but also in finding adequate data center space to house its own chips.

This situation echoes the global GPU shortage that followed the release of ChatGPT in 2023. As cryptocurrency prices fell, CoreWeave shifted its focus to visual effects rendering and AI services. The surge in demand for AI capabilities, coupled with significant investments from Blackstone and other investors, allowed CoreWeave to secure $24 billion in funding to build more data centers. This funding was partly driven by Microsoft's $40 billion order for Nvidia chips and the growing demand for AI services.

Google is not the only tech giant turning to CoreWeave for GPU resources. Microsoft has plans to pay over $100 billion to CoreWeave by the end of the decade to lease Nvidia chips, while OpenAI announced last month that it would pay $120 billion over five years to lease servers equipped with Nvidia devices. CoreWeave went public last week at $40 per share, and despite an initial drop, its stock price has since risen to over $54. The company acknowledged that the funds raised from its IPO were less than initially planned due to lower-than-expected demand for its stock.

Google's reliance on external GPU resources underscores the ongoing challenges in the tech industry to meet the escalating computational demands of modern applications. By leasing advanced GPU capabilities from CoreWeave, Google can maintain its competitive edge in the cloud services market without the need for extensive in-house production. This strategy allows the company to focus on innovation and delivering cutting-edge solutions to its clients, ensuring its continued leadership in the rapidly evolving tech landscape.