Nvidia-backed startup CoreWeave eyes $32 billion valuation in a public debut, a test for AI IPOs

CoreWeave is preparing for a high-stakes IPO, targeting a valuation of up to $32 billion as it looks to capitalize on the demand for artificial intelligence. The IPO news comes just weeks after the startup’s three founders—Mike Intrator, Brian Venturo, and Brannin McBee—each pocketed at least $150 million from stock sales, raising eyebrows across the industry.

According to Reuters, which first reported the term on Wednesday, the Nvidia-backed cloud services startup plans to sell 49 million shares, priced between $47 and $55, aiming to raise as much as $2.7 billion.

The listing is being closely watched as a test of investor appetite for AI-focused companies and could set the tone for upcoming IPOs in the sector.

“The cloud services provider and some of its investors are looking to sell 49 million shares priced between $47 and $55 each to raise as much as $2.7 billion in the offering, the company said on Thursday,” as reported by Reuters.

Founders Cashed Out $150M Each Ahead of IPO

The founders’ pre-IPO payday, first reported by The Information, was revealed in the company’s prospectus. Large early cash-outs like this aren’t common before an IPO, and they often spark questions about how confident insiders are in the company’s future valuation. CoreWeave originally aimed for a higher valuation of $35 billion but has since adjusted expectations.

Despite this, the company has locked in high-profile deals, including an $11.9 billion infrastructure contract with OpenAI. Nvidia, which holds nearly 6% of CoreWeave’s Class A shares, will see its stake drop to about 5% after the offering.

Intrator, Venturo, and McBee founded CoreWeave in 2017 to tackle a gap they saw in the cloud space. The company focuses on GPU-driven cloud services—those Nvidia chips now powering AI breakthroughs like ChatGPT. What started as a play for crypto mining has morphed into an AI-focused operation, riding the wave of ChatGPT’s success and the broader AI surge. Just in Q1 2023, AI startups collectively raised over $12 billion.

A Stress Test for AI IPOs

CoreWeave’s debut isn’t just about raising capital—it’s a signal for where AI investments might be heading. A strong showing could breathe life into a sluggish IPO market, while a lukewarm reception could suggest investors are becoming more cautious, especially after recent concerns about AI-driven data center demand.

The company has positioned itself as a key player in AI infrastructure, supplying access to high-performance chips primarily from Nvidia. But it’s not alone in this race. Competitors like Cerebras and data center operator Switch are reportedly exploring IPOs of their own, with Switch eyeing a $40 billion valuation.

Timing the Market

CoreWeave’s journey to this moment has been unconventional. It started as a crypto mining operation in 2017 before pivoting to AI cloud services after Ethereum’s 2022 upgrade made mining far less lucrative. The shift paid off, drawing major AI players and big-name investors.

Still, not everyone is convinced the AI boom will sustain its breakneck pace. Analysts have noted that Microsoft’s pullback on data center leases and the emergence of lower-cost AI models could temper demand.

“There are growing concerns that the explosion in AI-related data center demand won’t be as strong as previously thought, meaning investors will either demand a bargain price for CoreWeave shares or they might sit on the sidelines for now,” said Dan Coatsworth, an investment analyst at AJ Bell.

With backing from Morgan Stanley, J.P. Morgan, and Goldman Sachs, CoreWeave is set to list on the Nasdaq under the ticker symbol “CRWV.” Investors will soon decide whether this AI cloud startup is worth the sky-high expectations—or if the founders were smart to cash out early.