CoreWeave IPO Signals Issues With Microsoft-Centric Business Model

CoreWeave’s downsizing of its initial public offering (IPO) reportedly signals a cooling of investor enthusiasm for artificial intelligence IPOs and for IPOs in general.

The company, which offers cloud solutions for accelerated computing and dubs itself “the AI Hyperscaler,” said in a Thursday (March 27) press release that it is pricing its IPO at $40 per share.

CoreWeave had said in a March 20 filing with the Securities and Exchange Commission that it expected to price its IPO between $47 and $55 per share.

The company also reduced the size of its IPO from the 49 million shares mentioned in the March 20 filing to the 37.5 million shares announced in the March 27 press release.

These changes signal flagging investor interest in AI and a shift from the AI boom of a year ago when AI chip maker Nvidia became the world’s most valuable publicly traded company for a time, The Wall Street Journal (WSJ) reported Friday.

While companies are spending hundreds of billions of dollars on the technology, investors are uncertain about the sustainability of the AI boom, according to the report.

The shortage of the GPUs used to build and train AI seen in mid-2023 has subsided, and the cost of renting a GPU for an hour has dropped to about a quarter of what it was at that time, per the report.

When it comes to CoreWeave’s business in particular, investors have noted that its customer base is concentrated, with Microsoft accounting for nearly two-thirds of its 2024 revenue, the report said.

IPOs across different industries have also seen results that were less than expected, the report said, noting that the IPOs of gas exporter Venture Global and cybersecurity firm SailPoint fell in their opening trading and their stocks remain below their IPO prices.

It was reported Monday (March 24) that IPOs and mergers and acquisitions (M&A) are being curbed due to uncertainty around the President Donald Trump administration. This happened despite earlier enthusiasm that the new administration would provide a more friendly regulatory environment.

On Wednesday (March 26), it was reported that investment banks are gearing up to cut staff because of economic uncertainty caused by the Trump administration’s tariff threats.

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