Everything You Need to Know About Nvidia-Backed CoreWeave's IPO

Nvidia-backed cloud provider CoreWeave filed for an IPO this week, unveiling a prospectus that highlights its stunning revenue growth while also raising some concerns.

The AI-focused company plans to trade on the Nasdaq under the ticker CRWV, aiming to raise at least $3.5 billion at a valuation of $32 billion, with the potential to push for $40 billion. In its last funding round in November 2023, the company raised $650 million at a $23 billion valuation.

Nvidia invested in CoreWeave in 2023 and holds nearly a 6% stake while also being a customer of its computing power services. The cloud provider owned a total of 250,000 nvidia GPUs, supported by more than 360 MW of active power, by the end of 2024.

With Nvidia's backing, CoreWeave's revenue surged from $228.9 million in 2023 to $1.9 billion—an eightfold increase. However, the company remains deeply unprofitable, reporting a net loss of $863 million in 2024.

What shocked the market most was that CoreWeave's three co-founders had already sold off most of their Class A shares during two funding rounds in 2023 and 2024. Regardless of the IPO's outcome, they have collectively cashed out nearly $500 million.

Specifically, co-founder, CEO, and Chairman Michael Intrator sold approximately $160 million worth of shares, while co-founder and Chief Strategy Officer Brian Venturo and co-founder and Chief Development Officer Brannin McBee sold around $177 million and $151 million, respectively.

The three founders retained less than 3% of Class A shares but maintained approximately 80% of voting rights through Class B shares, which carry 10 times the voting power.

Notably, none of the three co-founders have a technology background. They initially formed their team to capitalize on the cryptocurrency mining boom. Before launching CoreWeave, they all worked in oil industry hedge funds.

Though Nvidia is a significant investor, Microsoft is CoreWeave's largest customer, contributing 62% of its revenue last year. However, on Thursday, Microsoft reported that it has scaled back some agreements with CoreWeave due to delivery issues and missed deadlines, according to the Financial Times.

Microsoft has several ongoing contracts with CoreWeave, providing it with computing capacity from data centers in deals worth billions of dollars. Sources say these issues have undermined Microsoft's confidence in CoreWeave. However, the tech giant has maintained some existing agreements, and the two companies remain key partners.

Public records show that Microsoft had agreed to purchase over $10 billion worth of computing power from CoreWeave by 2030 under five disclosed contracts.

In its S-1 filing, CoreWeave emphasized that any negative changes in Microsoft's demand or strategic relationship would adversely impact its business, operating results, financial condition, and future prospects.

There have also been reports that Microsoft's data center strategy has shifted after ending its exclusive compute-leasing agreement with OpenAI. Last month, a TD Cowen report suggested that Microsoft was moving away from data center leasing agreements. However, sources claim that Microsoft's decision to terminate some CoreWeave contracts is unrelated to this broader shift.

In response to market speculation, Microsoft stated that its infrastructure investment plans remain on track. However, in a recent interview, CEO Satya Nadella acknowledged concerns about overbuilding AI infrastructure.

Another key point to note is that CoreWeave carries $7.9 billion in debt. However, the founders portray this debt as a feature rather than a burden, claiming they pioneered GPU infrastructure-backed lending. Their valuable GPU collection serves as collateral for financing, allowing them to secure funding to purchase even more Nvidia GPUs.