Nvidia-backed CoreWeave started trading Friday below its initial public offering price of $40 before recovering to close flat. But the downsized IPO offered a cautious signal about investor demand for AI infrastructure stocks.
CoreWeave stock opened trading at 39 shortly after 1 p.m. ET today. That's after the cloud-computing startup listed 37.5 million shares at $40, raising $1.5 billion and giving CoreWeave a $20 billion valuation. That was well below CoreWeave's official target of offering 49 million shares at $47 to $55.
CoreWeave stock fell by as much as 5% before recovering to slight gains. Shares ultimately closed flat for the day at 40.
Nvidia, which already owns 6% of CoreWeave, was buying $250 million at $40 a share to anchor the CRWV IPO, according to Bloomberg. Nvidia stock was down 1.3% in recent Friday trading, moving back toward the six-month low of 104.77 set on March 11. The stock fell 2.05% on Thursday. NVDA stock tumbled 5.7% on Wednesday.
CoreWeave Stock: A 'Pure Play On AI'
The CoreWeave IPO is a test of investor demand for AI infrastructure stocks, which has been in serious doubt since China startup DeepSeek claimed a supercheap AI model in late January. Alibaba and other China companies have also announced cheaper, high-quality AI models.
CoreWeave is building out AI data centers to offer AI-related computing power. It's a big buyer of Nvidia AI chips.
According to an SEC filing, CoreWeave's revenue jumped more than 700% in 2024 to $1.92 billion, but with a net loss of $863.4 million. CoreWeave got 62% of its 2024 revenue from Microsoft, which reportedly is curbing some AI data center plans.
CoreWeave reached a reported $11.9 billion cloud deal with OpenAI earlier this month.
Still, CoreWeave's reliance on Microsoft raised some concerns among investors before its IPO launch. On Monday, analysts with D.A. Davidson initiated coverage of CoreWeave stock with a neutral rating and price target of 47.
"CoreWeave is the largest in the new neocloud category, but we see it mostly as a highly levered way for Microsoft to offload less desirable workloads and Nvidia to leverage a small investment into a very large customer," D.A. Davidson analyst Gil Luria wrote to clients.
CoreWeave's structure could continue to work "as long as demand for AI continues to grow exponentially," Luria added, but its growth could prove unsustainable if Microsoft no longer needs extra cloud capacity or OpenAI is unable to raise the spending it is committed to with CoreWeave.
CoreWeave A Test For IPO Market
Meanwhile, the scaled-back CoreWeave offering could offer an ominous sign for the overall IPO market. CoreWeave's offering is the highest-profile technology IPO so far this year. So-called tech unicorns — startups with a private valuation of over $1 billion — have been slow to go public since the 2021 bull market faded.
There was hope among investors, however, that 2025 could see more major tech stock debuts. Along with CoreWeave, fintech company Klarna is expected to test an IPO soon. But a slumping U.S. market could further slow the path to going public for Big Tech startups.
One of the only other large tech IPOs this year came from cybersecurity company SailPoint in February. Shares are trading below the Thoma Bravo-backed company offering price following SailPoint's first earnings release as a public company on Wednesday.
View More IPO News And Analysis
Please follow Ed Carson on Threads at @edcarson1971 and X/Twitter at @IBD_ECarson for stock market updates and more.
