CoreWeave has significantly reduced the size of its U.S. initial public offering (IPO) and priced shares lower than expected, signaling weaker investor confidence in the AI infrastructure sector.
The Nvidia-backed company will now offer 37.5 million shares at $40 each, a 23.5% reduction from its initial plan. This is well below the previously indicated range of $47 to $55 per share. The offering is expected to raise approximately $1.5 billion, valuing CoreWeave at around $23 billion on a fully diluted basis.
Investor Concerns and Market Challenges
CoreWeave’s IPO roadshow received a weaker-than-expected response due to investor concerns over its long-term growth, financial risks, and capital-intensive business model. The company’s heavy reliance on Microsoft, whose AI datacenter strategy is evolving, has also raised uncertainty about future demand for CoreWeave’s GPU-based services.
Additionally, CoreWeave’s substantial debt—approximately $8 billion—and its leasing model for 32 data centers and equipment have heightened investor caution. The company plans to use about $1 billion of the IPO proceeds to pay down debt but has indicated it will continue borrowing.
Despite being a key Nvidia customer with over 250,000 Nvidia GPUs deployed, CoreWeave has yet to turn a profit, making investors wary of its long-term viability.
AI Market Volatility and IPO Climate
The tepid reception to CoreWeave’s IPO raises concerns about the strength of the AI infrastructure market. Analysts suggest investors are recalibrating AI valuations amid uncertainty about data center spending. Additionally, competition from China’s DeepSeek, a low-cost AI rival, adds pressure to the sector.
CoreWeave had initially planned to sell 49 million shares to raise up to $2.7 billion, which would have valued it at $32 billion. However, due to mounting investor concerns, the company opted to scale back its IPO ambitions.
Despite the reduced offering, CoreWeave has secured significant partnerships, including an $11.9 billion infrastructure deal with OpenAI. The company will also issue $350 million in shares to OpenAI through a private placement.
Morgan Stanley, J.P. Morgan, and Goldman Sachs are leading the IPO underwriting.
