Cloud computing provider CoreWeave has suffered a major setback just a month ahead of its blockbuster $35 billion initial public offering (IPO).
Tech giant Microsoft has walked away from some of its commitments towards the company.
CoreWeave provides Microsoft with computing capacity from data centres– a crucial component in the Washington-based company’s bid to scale up powerful AI models such as OpenAI’s ChatGPT.
The partnership is worth billions of dollars to CoreWeave.
However, Microsoft has pulled out from some of its deals with the company over delivery issues and missed deadlines, Financial Times reported, citing people with knowledge of the matter.
The sources did mention that Microsoft retained a number of ongoing contracts with CoreWeave and it remained an important partner. Microsoft has agreed to spend over $10 billion on CoreWeave services by 2030 through five contracts with the company.
Microsoft’s decision comes at a bad time for CoreWeave, which lists the Satya Nadella-led tech giant as its largest customer by far. The New Jersey-based tech firm, earlier this week, filed for a New York IPO seeking to raise $4 billion and expected to value the group at more than $35 billion.
The public issue could be 2025’s biggest stock market debut for a tech company.
CoreWeave mentioned in its IPO filing papers that “any negative changes in demand from Microsoft, in Microsoft’s ability or willingness to perform under its contracts with us, in laws or regulations applicable to Microsoft or the regions in which it operates, or in our broader strategic relationship with Microsoft would adversely affect our business, operating results, financial condition, and future prospects.”
Deals with Microsoft represented 62 per cent of CoreWeave’s total revenues last year, according to public disclosures.
A former cryptocurrency mining operation, CoreWeave pivoted to providing cloud computing services for technology companies to build and train AI models using Nvidia’s high-performing graphics processing units (GPUs), Financial Times reported.
Under the potential risks section in its IPO filings, CoreWeave pointed to “asymmetry” and “delays” in its supply chain related to its concentrated exposure to Nvidia, which supplies all of its chips.
CoreWeave has stocked up on more than 250,000 of Nvidia’s AI GPUs, making it among the chipmaker’s biggest customers.
Source: As CoreWeave gears up for $35 bn IPO, Microsoft delivers it a major blow
