Nvidia (NVDA)-backed CoreWeave, an artificial intelligence (AI) cloud-computing startup, has locked in a nearly $12 billion contract with OpenAI. Under the five-year agreement, CoreWeave will provide the computing power needed to train and run OpenAI’s advanced AI models.
The timing couldn’t be better as CoreWeave recently filed for an IPO in New York, aiming to raise $4 billion. This partnership with OpenAI not only strengthens CoreWeave’s position in the AI cloud market but also adds credibility to its growth plans. With the IPO approaching, the deal could attract more investor interest and boost confidence in the company’s ability to deliver advanced computing services.
CoreWeave’s AI Presence Expands with OpenAI Deal
Started in 2017 as a cryptocurrency mining business, CoreWeave shifted to AI cloud computing and now runs over 250,000 Nvidia GPUs. This deal with OpenAI could attract more investors and strengthen its market position ahead of the IPO.
In addition, this new $11.9 billion contract helps fill the gap left by Microsoft, which recently canceled a planned deal with CoreWeave due to delivery concerns. Despite that setback, MSFT has committed to spending $10 billion on its services by 2030, accounting for 62% of CoreWeave’s revenue last year.
Why This Deal Matters for OpenAI
As part of the agreement, OpenAI will take a $350 million equity stake in CoreWeave during its IPO.
For OpenAI, the deal is a smart move to grow and diversify its computing resources. While Microsoft (MSFT) is still its biggest partner, OpenAI wants to rely less on a single source. By working with CoreWeave, OpenAI gets the tools it needs to build and run new AI models while staying flexible.
Lately, OpenAI has also teamed up with SoftBank (SFTBY) on a $500 billion data center project called “Stargate” and made cloud deals with Oracle. These steps aim to give OpenAI more control over its computing power, helping it keep up with the growing need for advanced AI models.
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 65.83% upside potential.
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