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CoreWeave Slashes U.S. IPO Size Amid Lukewarm Investor Interest

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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.

SK Hynix Reports Early Orders Ahead of Potential US Tariffs

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South Korean memory chipmaker SK Hynix announced on Thursday that some customers have accelerated their orders in anticipation of potential US tariffs on semiconductors. Speaking at the company’s annual shareholder meeting, Lee Sang-rak, Head of Global Sales and Marketing, attributed recent favorable market conditions to this “pull-in” effect and reduced customer inventory levels. However, he cautioned that it remains uncertain whether this trend will continue.

In January, SK Hynix projected a 10%-20% drop in DRAM and NAND flash memory shipments for Q1 2024. However, demand from the AI sector has contributed to price increases by competitors such as Micron, SanDisk, and China’s YMTC. Reports suggest that fears of impending US semiconductor tariffs, potentially reaching 25%, have led to increased inventory transfers to the US.

Despite concerns about AI hardware spending, SK Hynix remains optimistic about explosive growth in high bandwidth memory (HBM) chip demand, especially as a key supplier to Nvidia. CEO Kwak Noh-Jung confirmed that HBM sales for 2025 have already been fully booked, with negotiations for 2026 volume expected to conclude in the first half of this year.

RBC Bets on AI for Growth Amid Trade Uncertainty

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Royal Bank of Canada (RBC, RY.TO) is set to generate C$700 million to C$1 billion from its AI investments by 2027, CEO Dave McKay revealed at the bank’s first investor day since 2018. The revenue will come from business growth and technology cost savings, underscoring AI’s crucial role in RBC’s expansion strategy.

AI-Driven Innovation

McKay highlighted how generative AI can enhance employee capabilities, improve customer service, and automate key processes. RBC is utilizing Nvidia (NVDA.O) chips to create AI-powered avatars capable of engaging personal banking clients and offering product insights.

Growth Targets & Market Expansion

Despite trade uncertainties and potential tariff disruptions, RBC remains committed to achieving a 16% return on equity by 2027. The bank aims to:

  • Expand globally in capital markets and wealth management

  • Increase its U.S. market share, competing with Wall Street giants like JP Morgan

  • Strengthen personal banking and wealth segments in Canada

Challenges Ahead

RBC executives acknowledged that tariff-related uncertainties may slow corporate investment. However, they emphasized that long-term growth strategies remain unchanged.

RBC’s stock was down 0.9% in Toronto during afternoon trading.