CoreWeave, a firm that specializes in providing cloud-based GPU infrastructure, has just signed a massive deal with OpenAI, the firm behind ChatGPT. This new deal is worth up to $11.9 billion for five years, a massive leap for both parties.
What is in the Deal?
As part of this agreement, OpenAI will be putting in $350 million into CoreWeave by acquiring shares. As a return service, CoreWeave will provide AI infrastructure to help OpenAI develop and scale its technology, including ChatGPT. The acquisition is intended to raise capital for both companies that can be used to continue growth within the field of AI.
CoreWeave’s Finance
CoreWeave, formed in 2017 in New Jersey’s Livingston township, hit a few tough moments in the year 2024. The company brought in revenue of $1.9 billion but still found itself reporting a net loss of $863 million. This tie-up is being seen as an attempt at reeling from this loss. Microsoft was once CoreWeave’s largest customer, but Microsoft cancelled some contracts due to delays. CoreWeave has denied those claims, but the new contract with OpenAI may make up for that lost business.
What Is the Future of Cloud AI?
The cloud-based AI market is growing steadily. It stood at $46.7 billion in 2022, and by 2030, it will grow to $398 billion. This growth comes from the desire of firms to use AI services to maximize factors like scalability. This growth stems from firms needing to use AI services to advance factors like cost savings, and predictive analysis. With more companies employing cloud AI, demand for such platforms like CoreWeave’s offerings will also increase.
This deal with OpenAI is a good opportunity for CoreWeave, especially as it positions itself for an initial public offering (IPO). While it is competing against intense competition from giant players like Amazon, Oracle, and Google, this new partnership may be what CoreWeave needs to push its growth further in the cutthroat market for AI clouds, costs, and predictive analytics. As more businesses turn to the cloud AI, the demand for such platforms like CoreWeave’s offerings will also grow.
