OpenAI invests $12B in CoreWeave to expand AI infrastructure
What's the story
OpenAI has signed a five-year deal with GPU-focused cloud service provider CoreWeave.
The deal, reportedly worth $11.9 billion, involves OpenAI taking equity worth $350 million in CoreWeave.
This investment is separate from CoreWeave's upcoming Initial Public Offering (IPO), which was filed last week but is yet to set a date or price for its public debut.
Business dynamics
CoreWeave's growth and reliance on Microsoft
NVIDIA-backed CoreWeave (6% stake) runs an AI-centric cloud service. By the end of 2024, it had a network of 32 data centers with over 250,000 NVIDIA GPUs.
In just the last year, CoreWeave's revenue skyrocketed nearly eightfold from $228.9 million in 2023 to a staggering $1.9 billion in 2024.
However, before OpenAI's agreement, the company was largely dependent on Microsoft for its revenue stream. Last year, Microsoft accounted for 62% of CoreWeave's revenue.
Strategic move
OpenAI's investment could alleviate CoreWeave's IPO concerns
The massive agreement with OpenAI could allay fears about CoreWeave's dependence on a single customer for its IPO.
It also marks a strategic move in the changing dynamics between Microsoft and OpenAI. The two have been rivals in the enterprise space.
In January, as part of the massive Stargate AI project, Microsoft ceased being OpenAI's sole cloud provider, which has been looking for more computing resources amid claims of being "out of GPUs."
Company evolution
CoreWeave's transformation and financial status
CoreWeave began as a cryptocurrency mining operation but has grown into a leading player in the AI cloud service industry.
The company's three co-founders have already cashed out of $488 million worth of shares, which is over $150 million each.
However, CoreWeave also comes with a hefty debt of $7.9 billion. If its IPO brings in the expected capital, the company plans to use some of it to pay down its debt.