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CoreWeave’s (CRWV) stock surged nearly 42% on Tuesday, April 1, recovering above its $40 initial public offering price (IPO) after a disappointing second day of trading. The AI cloud provider closed at $52.57, valuing the company at a market capitalization of $25 billion.
The dramatic rebound follows Monday’s 7.3% drop, which had pushed shares below the IPO price and raised questions about investor appetite for tech offerings. CoreWeave, which specializes in renting access to Nvidia’s coveted GPUs to technology companies, represents the largest venture-backed tech IPO for a U.S. company since 2021.
“There’s a lot of headwinds in the macro,” CoreWeave CEO Michael Intrator acknowledged on CNBC’s “Squawk Box,” explaining why it had to “scale or rightsize the transaction” before going public. CoreWeave ultimately lowered its initial pricing range from $47-$55 to $40 and reduced its offering from 49 million shares to 37.5 million in response to market conditions.
CoreWeave Is Growing Rapidly
CoreWave’s IPO was closely watched as a bellwether for the public offering market. Notably, the IPO market has remained largely dormant for three years amid high inflation and rising interest rates. Several industry observers had hoped CoreWeave would herald a new wave of tech IPOs, with companies like StubHub, Klarna, and Hinge Health waiting in the wings.
In 2024, CoreWeave reported revenue of $1.92 billion, an increase of 737% year-over-year. However, similar to other early stage growth companies, it remains unprofitable, reporting a net loss of $863 million last year. Microsoft (MSFT) is CoreWeave’s largest customer, accounting for 62% of its top line in 2024.
Founded in 2017, CoreWeave pivoted from Ethereum (ETHUSD) mining to AI infrastructure. Today, it positions itself at the intersection of cloud computing and artificial intelligence — two of tech’s most dynamic sectors.
Nvidia Is a Key Customer
CoreWeave’s transformation accelerated after OpenAI launched ChatGPT in late 2022. The launch of the generative AI platform created massive demand for GPU computing resources, leading to a breakthrough deal with Microsoft, which needed additional computing capacity for OpenAI.
CoreWeave has since established a symbiotic relationship with Nvidia (NVDA), which is both a customer and an investor. The GPU giant played a crucial role in CoreWeave’s IPO, purchasing $250 million in shares at $40 after the latter had to scale back its initial pricing range amid challenging market conditions.
CoreWeave recently signed a five-year deal with OpenAI valued at nearly $12 billion, helping reduce its dependency on Microsoft, which accounted for the majority of total sales last year. Despite remarkable revenue growth, CoreWeave faces challenges, including substantial debt (with interest rates as high as 14%) and complete dependency on Nvidia GPUs.
Given a challenging macro environment and the ongoing tariff war, investors should expect CoreWave stock to remain volatile in the near term. Additionally, it makes sense to wait for a few quarters and see if CoreWeave can maintain its growth trajectory, diversify its customer base, and improve profit margins before gaining exposure to the tech stock.
