CoreWeave’s Bumpy IPO Sees $23 Billion Valuation But Investor Caution Lingers

AI infrastructure company CoreWeave, backed by Nvidia, secured a $23 billion valuation on a fully diluted basis. However, its shares closed flat on its Nasdaq debut after opening nearly 3% below their offer price, as per media reports.

Due to recent stock market volatility, the company lowered its fundraising expectations. It initially hoped to raise between $3 billion and $4 billion. The stock opened at $39, compared with the IPO price of $40.

​​Slashed Expectations and a Smaller IPO

CoreWeave reduced the size of its initial public offering by 23.5%, planning to sell 37.5 million shares at $40 each. The price was significantly lower than the initial indicated range, and the decision to downsize was made a day earlier.

According to Reuters, AI chip giant Nvidia contributed a $250-million order as part of CoreWeave’s IPO, which raised $1.5 billion.

Although CoreWeave’s IPO was one of the largest AI-related IPOs recently, it fell short of investor expectations. Investor caution was driven by concerns regarding the company’s reliance on Nvidia for hardware, dependence on large tech clients for revenue, and substantial debt. These factors contributed to a less-than-ideal market response, despite initial excitement.

AIM Research had mentioned it in one of the earlier reports that CoreWeave experienced a remarkable 747% revenue growth in 2024. However, this has not universally convinced people that the company will be the next big success in AI.

Overreliance on Nvidia and Debt

One of the most significant concerns surrounding Coreweave’s business model was its heavy dependence on Nvidia GPUs for its infrastructure. This reliance on a single supplier presented a considerable risk, as Nvidia currently dominates the AI hardware market.

Several potential challenges could arise from this dependence. For instance, if Nvidia were to increase its pricing, Coreweave’s operational costs could escalate significantly, potentially impacting profitability and competitiveness. Similarly, any disruptions to Nvidia’s supply chain, whether due to unforeseen events like natural disasters or geopolitical tensions, could lead to delays or shortages in GPU availability. This could impede Coreweave’s ability to scale its operations or meet customer demands in a timely manner.

Furthermore, Nvidia’s dominant market position could potentially allow them to exert significant control over pricing and supply terms. This could leave Coreweave with limited bargaining power and vulnerable to sudden shifts in market conditions.

Overall, this reliance on a single supplier for such a critical component of its infrastructure introduced a significant element of risk into Coreweave’s business model. This vulnerability to external factors understandably made some investors wary, as it could impact the company’s growth trajectory and financial stability.

However, CoreWeave’s substantial debt also contributed to investor concerns. High debt levels can increase financial risk, particularly for a company dependent on securing large contracts to maintain operations. These concerns, coupled with the capital-intensive nature of CoreWeave’s business and potential challenges if it doesn’t scale as anticipated, tempered the market’s reaction to the IPO. 

Currently the company has almost $8 billion in debt as of last year which it incurred to purchase depreciating assets in the AI industry.

In 2025, the tech market has been volatile, particularly for AI-related stocks. Investor sentiment has been cautious due to concerns about overvaluation in the AI sector, despite excitement around the technology’s potential. These market conditions, including risks and uncertainties, impacted CoreWeave’s IPO performance, which coincided with this period of cautious investor sentiment.

Investors and clients were anxiously awaiting the outcome of CoreWeave’s IPO, which was one of the AI industry’s biggest since Arm’s 2023 public offering. Despite selling fewer shares at a lower price than expected, CEO Michael Intrator hailed the IPO as an “unbelievable, overwhelming victory.”

Strategic Deal with OpenAI Offers Hope

In a recent announcement, CoreWeave struck a strategic deal of atleast $11.9 billion with Open AI for a term of five years to deliver AI infrastructure to the industry giant, expanding OpenAI’s compute capacity for training and delivering its latest models at scale to its hundreds of millions of users around the world.

“Advanced AI systems require reliable compute, and we’re excited to continue scaling with CoreWeave so we can train even more powerful models and offer great services to even more users,” said Sam Altman, CEO of OpenAI.

CoreWeave experienced a remarkable 700% increase in revenue last year, reaching nearly $2 billion. Despite this growth, the company still reported a net loss of $863 million. This is due to the capital-intensive nature of CoreWeave’s business model, which requires substantial investments in equipment and real estate.