The AI cloud computing provider CoreWeave made its debut on the Nasdaq Friday under the ticker CRWV. The stock fell as much as 5.8% after shares began trading.
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Signs of trouble had already been brewing. The company, which provides computing power using its mass supply of Nvidia (NVDA) GPUs to Big Tech, raised $1.5 billion in its IPO — much lower than the $4 billion it had initially hoped to raise.
CoreWeave’s IPO and public debut are the first real test of the AI trade, critics say. That’s because the Nvidia-backed company’s fate relies in large part on the sustained success of generative artificial intelligence, which CoreWeave itself said in its amended S-1 filing to the US Securities and Exchange Commission is an unknown.
“The broader adoption, use, and commercialization of AI technology, and the continued rapid pace of developments in the AI field, are inherently uncertain,” the company said in its filing when describing its risk factors.
Michael Intrator, Co-founder & CEO of CoreWeave, at Web Summit 2024 in Lisbon. (Photo by Bruno de Carvalho/SOPA Images/LightRocket via Getty Images) · SOPA Images via Getty Images
CoreWeave’s revenue soared to $1.9 billion in 2024 from just $229 million the prior year, the filing showed. At the same time, however, its net loss rose to $863 million from $594 million. And some 77% of CoreWeave’s 2024 revenue came from just two customers, with 62% coming from Microsoft (MSFT), according to the filing. Those customers who offer cloud services, known as “hyperscalers,” use CoreWeave’s GPU-filled data centers to power their AI efforts.
“Any negative changes in demand from Microsoft… would adversely affect our business, operating results, financial condition, and future prospects,” CoreWeave wrote.
Microsoft stock dropped more than 3% after CoreWeave shares began trading. Nvidia fell 1.7%.
The company remains optimistic. “This discussion of [an] AI bubble, we don’t understand it,” CoreWeave co-founder and chief development officer Brannin McBee told Yahoo Finance’s Brian Sozzi.
“Clients come into us, and they are saying, ‘CoreWeave, we recognize you’re the best at delivering this infrastructure in the in the space. We need more and we need a lot more.’ And that scale of growth is just continuing to accelerate for us,” he said. “That’s why we’re going public is to support our clients in their growth requirements for infrastructure that we bring to market for them.”
“We are the critical piece to connecting the artificial intelligence products that the world’s thought leaders are bringing to market to the consumers of those products,” he continued.
CoreWeave faces $7.5 billion in debt repayments by the end of next year, the Financial Times reported.
