CoreWeave Valuation Jumps to $8 Billion amid AI Boom and Microsoft Partnership
CoreWeave continues to elicit strong interest amid the artificial intelligence boom. The cloud computing provider is reportedly exploring a minority stake sale in a deal that could value it as much as $8 billion. The multi-billion valuations come on the heels of reports indicating that OpenAI, another sensational AI play, is on course to become a multi-billion business generating over $1 billion in revenues annually.
The Roseland, New Jersey-based startup has engaged the services of an adviser as it looks to sell about 10% of equity stakes at a valuation of between $5 billion and $8 billion. While the company previously specialized in Ethereum mining, it appears to have struck gold on leveraging Nvidia’s graphics chips to develop data centers.
CoreWeave has already started building data centers based on Nvidia chips to enable clients to take advantage of artificial intelligence-related computing as a service. As demand for AI-powered data centers grows, the company is enjoying booming business and is projected to achieve revenues of $1.5 billion next year. Nvidia’s CEO has already touted the company as one of the many that are doing extremely well in embracing AI.
The startup is familiar in the money markets, having already raised $421 million in equity this year. The high intake does not come as a surprise, given the ever-growing demand for startups with significant exposure to the game-changing technology. Nvidia is one of the companies believed to have invested in the cloud computing provider as it remains bullish about its long-term prospects.
Early this month, the startup secured $2.3 billion in debt financing from Magnetar Capital and funds managed by Blackstone Tactical Opportunities. The investment underscores how funds and investors are jostling to gain exposure to its business.
Microsoft’s Billion Dollar Opportunity
In addition, CoreWeave has emerged as an exciting AI startup on Microsoft, announcing plans to spend billions of dollars on its cloud infrastructure. CoreWeave has emerged as an ideal partner for the software giant, given that it offers simplified access to Nvidia’s graphics processing units, which are the best in running AI models.
Earlier this year, Microsoft signed a deal with CoreWeave to ensure OpenAI, which operates the viral ChatGPT, has adequate computing power. The deal came on CoreWeave reiterating that it can deliver computing power that is 80% less expensive than what is on offer in other legacy cloud providers.
CoreWeave already offers access to the less expensive Nvidia A40 GPUs that are ideal for visual computing. It also has access to A100 for its data centers, chips best known for data analytics, and high performance. Consequently, Microsoft has seen it as an ideal partner for strengthening its cloud unit, which is facing stiff competition from Google and Amazon.
Google is increasingly working with other companies as it looks to integrate as many AI tools and models into its cloud. The company has already inked deals with Meta Platform and Anthropic to have their AI tools and models in its cloud. The integration is part of the tech giant’s plan to become a go-to platform for everything AI as it looks to attract as many corporate clients as possible.