CoreWeave, a cloud computing firm that offers artificial intelligence (AI) services, priced its initial public offering (IPO) at $40 per share, below the expected $47 to $55 range. The pricing indicates investor conservatism amid increasing demand for AI-powered cloud computing solutions.
The sale includes 37.5 million shares, with CoreWeave selling 36.59 million and current shareholders selling 910,000. The company also provided underwriters with a 30-day overall allotment option to purchase up to a further 5.63 million shares to manage over-allotments. The shares of CoreWeave will be listed with the ticker symbol “CRVW” on the Nasdaq Global Select Market, with trade to begin March 28 and the offering likely to close March 31.
In 2024, CoreWeave generated revenue of $1.9 billion, a 737% increase compared to the previous year. Notwithstanding this big growth, the business made a net loss of $863 million in the same year, citing the loss as a result of investments that were meant to support future growth.
CoreWeave’s high-growth path is supported by partnerships with market leaders like OpenAI, Meta Platforms Inc., Microsoft Corp., and Nvidia Corp. Importantly, Microsoft represented 62% of CoreWeave’s revenue in 2024, reflecting a notable revenue concentration risk. Yet the company believes Microsoft’s percentage of future committed contract revenue will decrease to below 50%.
The IPO price below expectations indicates a moderation of investor sentiment towards AI-focused cloud computing companies, potentially driven by concerns over revenue concentration and profitability. Nvidia, a dominant supplier of GPUs for CoreWeave’s AI cloud infrastructure, owns 5.96% of the firm pre-IPO, with expectations of a modest decline post-offering. The chip behemoth has pledged an anchor investment of $250 million at the IPO price, and OpenAI will invest $350 million via a private placement following the IPO.
CoreWeave’s IPO, which priced below expectations, reflects the optimistic caution that is gripping investors in the AI cloud computing space. Though the company’s high-growth revenue and strategic partnerships put it at a key position in the industry, issues of profitability and customer concentration are still central concerns for stakeholders as CoreWeave sets off as a publicly listed company.
