Wall Street yawned as CoreWeave made its public debut, with shares of the AI infrastructure provider stumbling below their $40 offering price. The company’s much-anticipated IPO raised $1.5 billion – not bad, but definitely not the slam dunk many had expected from a firm that saw its revenue rocket up 737% last year.
The numbers tell a complicated story. Sure, CoreWeave pulled in $1.9 billion in revenue for 2024, but they’re sitting on $8 billion in debt and managed to lose $863 million along the way. Not exactly the kind of math that makes investors jump for joy.
Despite CoreWeave’s impressive revenue surge, its mountain of debt and massive losses paint a less rosy picture for investors.
And let’s talk about that Microsoft dependence – when one customer makes up 62% of your revenue, that’s less of a partnership and more of a prayer. The company offered 37.5 million shares to the public, with most coming directly from CoreWeave and a small portion from existing stockholders. Like many corporate bonds, the high debt load carries significant default risk.
From crypto miner to AI infrastructure darling, CoreWeave’s transformation since 2017 has been nothing short of remarkable. But Wall Street’s seen enough tech fairy tales to know better. The company had to scale back both its valuation expectations and share offering, dropping from a dreamy $30 billion-plus target to a more earthbound $23 billion.
The timing isn’t great. Investors are entering what analysts call the “prove it” phase of AI investment – fancy talk for “show me the money.” While 77% of buyers believe AI software is making real progress, they’re getting pickier about where they put their cash. The company’s partnership with OpenAI worth $11.9 billion demonstrates significant market confidence despite the cautious investor sentiment.
The fact that CoreWeave burns through chips from Nvidia like they’re potato chips isn’t helping ease supply chain concerns.
Looking ahead, CoreWeave faces an AI infrastructure market that’s expected to hit $200 billion by 2028. That’s the good news.
The bad news? They’re up against the tech industry’s 800-pound gorillas – AWS, Google Cloud, and Azure – plus a swarm of hungry startups.
Morgan Stanley, J.P. Morgan, and Goldman Sachs might have shepherded this IPO to market, but Wall Street’s message is clear: Show us the profits, then we’ll talk.
