Still, CoreWeave is the biggest IPO of the year so far, and a key gauge for AI stocks in general.
CoreWeave (NASDAQ:CRWV) stock hit the market Friday after launching its initial public offering (IPO).
There has been a great deal of anticipation for this IPO, the largest of the year so far. CoreWeave is a pure play AI stock that serves as somewhat of a bellwether for investors current appetite for AI stocks.
Based on the IPO, it shows that investor appetite for AI has not improved much. While it is the highest debut so far this year, the CoreWeave IPO came in below what the company was initially expecting. In its SEC filing on March 20, CoreWeave was planning to offer some 49 million shares at a price of between $47 and $55 per share, worth up to $2.7 billion.
But on Thursday, one day before the launch, CoreWeave dialed things back, offering 37.5 million shares at a price of $40 per share, bringing in $1.5 billion. The market cap is pegged at about $23 billion.
That may not be a bad thing, as there has been a pattern over the years of tech IPOs coming out too hot, then immediately tanking because they were overvalued. We’ll see how this plays out, but going lower in this market, where many AI stocks are overvalued and experiencing double-digit losses, is likely a wise move.
Still, AI stocks, and CoreWeave partners, were trending lower on Friday, with NVIDIA and Microsoft both down about 2%.
The “AI Hyperscaler”
CoreWeave calls itself the “AI Hyperscaler” as it provides AI infrastructure to companies that operate in the AI space. As such, it runs data centers across the U.S. and Europe, accelerating AI computing for AI labs and enterprises.
Those AI labs and enterprises include Cohere, IBM, Meta Platforms, Microsoft, Mistral AI SAS, NVIDIA, and OpenAI.
“Of our total deployed GPUs, which exceeded 250,000 as of December 31, 2024, a majority were NVIDIA Hopper models, representing one of the world’s largest next generation GPU fleets. Additionally, we were among the first cloud providers to deploy high-performance infrastructure with NVIDIA H100, H200, and GH200, and the first cloud provider to make NVIDIA GB200 NVL72-based instances generally available demonstrating our ability to provide our customers with market-leading access to the latest cutting-edge technology,” the firm’s SEC filing reads.
NMVIDIA is also a big investor in the CoreWeave IPO, as it was expected to buy $250 million worth of CoreWeave shares, reported Investor’s Business Daily.
Further, CoreWeave just announced an $11.9 billion deal to deliver AI infrastructure to OpenAI. As part of this deal, OpenAI agreed to buy $350 million of CoreWeave stock.
In 2024, the company generated $1.9 billion in revenue, which was up a whopping 737% from the previous year. It had a $900 million net loss, with a 17% operating income margin. Also, it had 250,000 deployed GPUs and operated 32 data centers.
However, some three-quarters of its revenue comes from just two clients, and about 62% of that comes from its largest client, Microsoft, reported Forbes. That type of high concentration is a concern, particularly if Microsoft or other big clients walked away, as had been reported earlier this month by the Financial Times. But those claims have been denied by CoreWeave.
This is a tough time to launch an IPO, especially for an AI stock. Investors may want to wait and see how things shake out in the first weeks of trading.
