If ever there was a canary in the coalmine for signs of peak bubbliciousness, it is/was the CoreWeave IPO.
The spinoff from Nvidia is a specialized cloud computing company that provides high-performance, GPU-accelerated infrastructure tailored for AI and machine learning workloads, operating a growing network of data centers across the United States and Europe to support its services.
In other words, it's right at the heart of the supposed CapEx boom.
But, Semafor's Liz Hofman reports this morning that the IPO valuation has been drastically downsized:
Additionally, they have reduced the IPO size to around $1.5 billion (from around $3 billion).
Here's the potential problem, as we detailed previously:
CoreWeave has been compared to WeWork because its tremendous revenue growth has come at the expense of unsustainable capex and cash burn, which in turn require tremendous constant outside investment (or debt): CoreWeave burned nearly $6 billion of cash in 2024 and $1.1 billion the previous year, because of the massive capex to build out its AI infrastructure.
Not surprisingly, CoreWeave - which also counts Microsoft as its largest customer - has been frequently rumored to be a core spoke in revenue roundtripping schemes involving Microsoft, Nvidia and OpenAi.
The Cowen report comes just days after speculation emerged that Coreweave is rushing to complete its massive IPO to cover up the the fact that Microsoft, which accounts for a majority of CoreWeave's revenue, recently passed on a $12 billion option for compute with the company; as Semafor reported, that compute slot was then promptly filled by OpenAI, (which of course is largely funded by Microsoft).
As Semafor writes, CoreWeave’s public-market debut isn’t just a closely watched bellwether for AI, but for the IPO market overall, which has been in a deep freeze.
For now, NVDA shares are unmoved by the report (did everyone know yesterday?)
Tick tock on this AI bubble?
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