Cloud computing provider CoreWeave (CRWV) rebounded from an initial drop in morning trading on Thursday after announcing a fresh $6.5 billion deal with OpenAI (OPAI.PVT), adding to an already multibillion-dollar set of agreements with the ChatGPT maker.
CoreWeave lost 5% in premarket trading. It quickly rebounded to gain more than 1% in the first hour after the opening bell Thursday morning as the market digested news of the new agreement, which now brings the value of the companies’ joint agreements to $22.4 billion.
Livingston, N.J.-based CoreWeave provides cloud computing infrastructure specifically designed for tasks requiring massive amounts of GPU processing power, like training machine learning and AI models.
This fresh deal promises OpenAI additional computing power needed to train and operate its AI models on top of what CoreWeave already provides the AI giant. The two companies signed an initial agreement for computing power last March for $11.9 billion, then added a $4 billion agreement in May.
“We are proud to expand our relationship with OpenAI, a company consistently at the forefront of advancing artificial intelligence,” CoreWeave co-founder, chair, and CEO Michael Intrator said.
The news comes after OpenAI announced on Tuesday that its Stargate AI data center and cloud computing site in Abilene, Texas, will open three new sites with partner company Oracle (ORCL) in a deal worth $300 billion.
The AI giant said Stargate aims to secure 10 gigawatts of capacity for the site, worth $500 billion, by the end of the year. Nvidia (NVDA), which has signed multibillion-dollar computing purchase agreements with CoreWeave, just minted a new deal with OpenAI in which OpenAI will build at least 10 gigawatts of AI data centers with Nvidia, and Nvidia will invest up to $100 billion in OpenAI.
CoreWeave shares, meanwhile, are up 230% since its IPO in March. The company has been aggressive in dealmaking, inking agreements with OpenAI, Nvidia, Microsoft (MSFT), and IBM (IBM). Wall Street analysts have largely been bullish on the company.
But skeptics see potential issues, especially in the CoreWeave’s concentration of customers.
“Chances were already high that CoreWeave would be involved in the NVDA/OAI collaboration, given their experience as an infrastructure partner to both OpenAI and NVDA, who are also CRWV’s core clients,” Hedgeye Risk Management wrote in a research note published Thursday morning after the deal announcement.
“Enormous customer concentration is coming, as we think NVDA and OAI will be CRWV’s only core customers by the end of 2027.”
Cloud computing provider CoreWeave (CRWV) rebounded from an initial drop in morning trading on Thursday after announcing a fresh $6.5 billion deal with OpenAI (OPAI.PVT), adding to an already multibillion-dollar set of agreements with the ChatGPT maker.
CoreWeave lost 5% in premarket trading. It quickly rebounded to gain more than 1% in the first hour after the opening bell Thursday morning as the market digested news of the new agreement, which now brings the value of the companies’ joint agreements to $22.4 billion.
Livingston, N.J.-based CoreWeave provides cloud computing infrastructure specifically designed for tasks requiring massive amounts of GPU processing power, like training machine learning and AI models.
This fresh deal promises OpenAI additional computing power needed to train and operate its AI models on top of what CoreWeave already provides the AI giant. The two companies signed an initial agreement for computing power last March for $11.9 billion, then added a $4 billion agreement in May.
“We are proud to expand our relationship with OpenAI, a company consistently at the forefront of advancing artificial intelligence,” CoreWeave co-founder, chair, and CEO Michael Intrator said.
The news comes after OpenAI announced on Tuesday that its Stargate AI data center and cloud computing site in Abilene, Texas, will open three new sites with partner company Oracle (ORCL) in a deal worth $300 billion.
The AI giant said Stargate aims to secure 10 gigawatts of capacity for the site, worth $500 billion, by the end of the year. Nvidia (NVDA), which has signed multibillion-dollar computing purchase agreements with CoreWeave, just minted a new deal with OpenAI in which OpenAI will build at least 10 gigawatts of AI data centers with Nvidia, and Nvidia will invest up to $100 billion in OpenAI.
CoreWeave shares, meanwhile, are up 230% since its IPO in March. The company has been aggressive in dealmaking, inking agreements with OpenAI, Nvidia, Microsoft (MSFT), and IBM (IBM). Wall Street analysts have largely been bullish on the company.
But skeptics see potential issues, especially in the CoreWeave’s concentration of customers.
“Chances were already high that CoreWeave would be involved in the NVDA/OAI collaboration, given their experience as an infrastructure partner to both OpenAI and NVDA, who are also CRWV’s core clients,” Hedgeye Risk Management wrote in a research note published Thursday morning after the deal announcement.
“Enormous customer concentration is coming, as we think NVDA and OAI will be CRWV’s only core customers by the end of 2027.”
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