CoreWeave has pared back the scope of its initial public offering amid growing investor uncertainty in an overheating AI marketplace and risks posed by the GPU cloud specialist's exposure to a small number of customers.
According to CoreWeave, pricing for its stock will be $40 per share, rather than the widely expected range of $47 to $55 per share, when it begins trading on the Nasdaq Global Select Market today under the ticker symbol "CRWV."
The New Jersey-based biz is putting up about 37.5 million shares and expects to raise $1.5 billion, instead of an initial plan of 49 million shares, which would have netted somewhere around $2.7 billion.
It is understood CoreWeave was originally hoping to see $4 billion raised from its public offering.
CoreWeave is one of a new breed of cloud providers that focuses on GPU-based server infrastructure and services to support the development and training of AI models. It claims to have more than 250,000 GPUs online, spread across 32 datacenters, mostly located in the US.
The firm has attracted billions in investment, including $7.5 billion raised in a debt deal with a bunch of private equity operators last year, adding to the $1.1 billion secured in a separate round prior to that.
However, in a Form S-1, filed this month with the Securities and Exchange Commission (SEC) when CoreWeave announced the IPO, it confirmed that 77 percent of its revenues came from just two customers during 2024. Microsoft accounted for 62 percent of the total, and Nvidia was understood to comprise the remainder. CoreWeave also supplies services to Meta, IBM and Cohere, meaning it is exposed to the whims of a handful of major corporate clients.
In addition to this, Microsoft is reportedly scaling back on some datacenter investments, sparking concerns that it had found itself in an oversupply situation – meaning it was revising downward the estimated compute capacity it needs to deliver AI services. As CoreWeave's business model is renting extra GPU capacity to cloud companies on demand, this was considered to be bad news.
Uptake of Microsoft's Copilot AI is reportedly lower it expected, with a recent trial by Australia's Department of the Treasury discovering that participants found Copilot less useful than expected, while other projects using it have run into security and corporate governance concerns.
At the same time, there is growing unease that the AI boom may be a bubble. This week, Alibaba Group co-founder and chairman Joe Tsai expressed doubts about the high level of funding going into building datacenters for AI, saying it looks set to exceed actual market demand.
A recent report from Lenovo based on research by IDC also noted that many business leaders remain unconvinced that AI is worth all the investment. It found that only 4 of 33 AI proof-of-concept projects surveyed actually progressed into production, equating to an 88 percent failure rate. ®