In recent years, there have been few notable initial public offerings (IPOs), especially from companies poised to compete with top tech stocks. However, a company at the forefront of the artificial intelligence (AI) revolution is gearing up for its public debut. This company, set to debut on the Nasdaq under the symbol CRWV, has caught the attention of investors and industry giants like Nvidia and Microsoft.
CoreWeave originally started in 2017 as a venture by executives from a natural-gas-focused hedge fund, with a focus on cryptocurrency mining. Transitioning its expertise in deploying Nvidia GPUs for crypto mining to AI computing, CoreWeave pivoted in 2020 to develop the CoreWeave Cloud Platform. Nvidia’s investment in the company in April 2023 further solidified its position in the AI space.
CoreWeave’s strategic advantage lies in its AI-optimized GPU clusters, uniquely designed for efficient utilization through proprietary orchestration and observability software. Compared to traditional cloud platforms, CoreWeave’s approach ensures higher utilization rates of its GPUs, addressing the challenges of complex and computationally intensive AI workloads.
By introducing innovative software solutions like SUNK, a platform combining Kubernetes and Slurm, CoreWeave aims to optimize the performance of AI clusters and narrow the gap between actual and theoretical compute capacity. This unique approach positions CoreWeave as a significant player in the AI infrastructure landscape, offering enhanced efficiency and performance for clients in the rapidly evolving AI industry.
Traditionally, customers had to choose between running Slurm or Kubernetes for each compute cluster. However, CoreWeave’s SUNK platform now allows Slurm to operate within Kubernetes, offering developers the benefits of both systems and increasing compute utilization efficiency.
Another software innovation by CoreWeave is Tensorizer, an optimization software designed for inference and training purposes. For inference, Tensorizer can direct a model from storage to the closest GPU node, resulting in faster load times compared to competitors like HuggingFace and SafeTensors. When it comes to training, Tensorizer can enhance efficiency and reduce training times through similar optimizations.
Aside from its software advancements, CoreWeave enjoys a potential time-to-market advantage over other cloud providers due to its relationship with Nvidia. With Nvidia’s backing, CoreWeave likely has early access to the latest Nvidia GPUs. In fact, CoreWeave was among the first to offer Nvidia H100 and H200 systems, and was the first cloud provider to offer Nvidia GB200 NVL72-based instances.
Financially, CoreWeave has experienced significant growth in recent years, as evidenced by its revenue and operating income figures. The company’s revenue skyrocketed from $15.8 million in 2022 to $1,915.4 million in 2024, with a notable shift to operating profitability. The 2024 growth rate of 737% is particularly impressive for a startup, reflecting the company’s rapid expansion.
Despite its promising outlook, there are potential risks associated with CoreWeave that investors should consider. While the company’s valuation may appear high, its growth trajectory and long-term potential in generative AI could justify the valuation. However, the heavy reliance on Microsoft for a significant portion of its revenue raises questions, especially when compared to the engagement of other major cloud players like Amazon and Alphabet, who have their own custom ASIC programs. Microsoft’s recent entry into custom AI chip development with the Maia AI chip in 2023 may explain its extensive usage of CoreWeave’s services.
Microsoft may find value in CoreWeave’s data center capabilities for various reasons, which could be a significant factor. However, if Microsoft advances its technology and Maia reaches the level of Google TPUs or Amazon’s AI chips, there may be less reliance on CoreWeave’s infrastructure. While Nvidia GPUs remain in demand presently and in the future, Microsoft’s development of its own chips could potentially reduce the need for CoreWeave’s services, enabling Microsoft to invest more directly in Nvidia chips for its data centers.
Cloud companies have the option to purchase custom ASICs at foundry prices, but Nvidia’s gross margins are significantly higher, making it more costly to buy Nvidia GPUs compared to designing and purchasing one’s own chips from a foundry. CoreWeave’s association with Nvidia also provides early access to cutting-edge chips, solidifying its future alongside Nvidia.
However, CoreWeave’s future is intertwined with Nvidia’s trajectory, making it susceptible to fluctuations in the AI market or changes in Nvidia’s competitive standing. As a potentially volatile and contentious stock when it goes public, CoreWeave presents both enticing investment opportunities and significant risks that may prompt cautious investor behavior.
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