Nvidia (NVDA)-backed cloud computing provider CoreWeave has reportedly hit a major setback ahead of its highly anticipated IPO, as its biggest customer, Microsoft (MSFT), scaled back on some commitments. The Financial Times, citing sources familiar with the matter, reported that Microsoft has withdrawn from certain agreements due to delays and delivery issues.
Notably, CoreWeave supplies Microsoft with computing power from its data centers, enabling the tech giant to expand advanced AI models like OpenAI’s ChatGPT. To be specific, Microsoft has committed over $10 billion to CoreWeave services by 2030 across five contracts. Last year, Microsoft accounted for 62% of CoreWeave’s revenue, per public filings.
What it Means for CoreWeave
As CoreWeave gears up for what could be 2025’s biggest tech IPO, a potential withdrawal from Microsoft may pose a significant setback. Earlier this week, CoreWeave filed for an IPO in New York, aiming to raise $4 billion and secure a valuation exceeding $35 billion. In its IPO filings, CoreWeave cautioned that any decline in Microsoft’s demand, contractual commitments, regulatory environment, or overall partnership could negatively impact its business and growth prospects.
FT also stated that some sources withheld details on canceled services, but one said the issues hurt Microsoft’s trust in CoreWeave. However, they also mentioned that Microsoft still has several active contracts with CoreWeave and continues to view it as a key partner.
CoreWeave’s Close Partnership with Nvidia
Nvidia is a key investor in CoreWeave, having invested $100 million in the AI cloud platform in early 2023. Meanwhile, the chip giant holds 1.21% of the voting rights. Additionally, CoreWeave has acquired over 250,000 of Nvidia’s AI GPUs, ranking among the chipmaker’s largest customers.
CoreWeave’s major investors include executives, private equity giant Blackstone (BX), hedge fund Magnetar Capital, and Fidelity, among others.
Is Nvidia a Good Stock to Buy?
According to TipRanks, NVDA stock has a Strong Buy consensus rating based on 39 Buys and three Holds assigned in the last three months. At $177.41, the Nvidia average share price target implies a 51.24% upside potential.
