CoreWeave's $11.9 Billion Deal with OpenAI: A Prelude to IPO Success?

CoreWeave, an AI startup backed by Nvidia, has secured an $11.9 billion contract with OpenAI for cloud computing services, ahead of its IPO. In exchange, OpenAI will gain a stake in CoreWeave, which plans to issue shares worth $350 million. The deal reflects growing investor interest in generative AI.

CoreWeave, a budding artificial intelligence startup with Nvidia's backing, has entered into a $11.9 billion, five-year contract with the renowned OpenAI for cutting-edge cloud computing services. This strategic move comes as CoreWeave gears up for its eagerly anticipated stock market launch. Sources close to the matter revealed this development to Reuters on Monday, emphasizing the confidentiality of the ongoing talks.

As per insider information, the agreement will entitle OpenAI to a stake in CoreWeave, with shares valued at $350 million to be issued through a private placement concurrent with the company's initial public offering. However, CoreWeave is not set to benefit from any IPO proceeds through its share issuance to OpenAI. Though CoreWeave declined to comment on the situation, industry analysts suggest that its shares could soon be listed in New York, with the timing and size contingent on market dynamics and potential changes in agreement terms with OpenAI.

For CoreWeave, success in these negotiations could catalyze their stand-out IPO, projected to lead the U.S. lineup in 2025 amid surging investor interest in generative AI. Founded in 2017, the company specializes in hosting data centers and providing high-powered chips for AI, mainly sourced from Nvidia. Competing with Microsoft Azure and AWS, CoreWeave's clientele includes major tech players like Meta, IBM, and Microsoft, eyeing a valuation exceeding $35 billion in its upcoming market debut.

(With inputs from agencies.)