CoreWeave, a key player in the AI cloud infrastructure space, has scaled back its plans for its highly anticipated U.S. initial public offering (IPO). Initially, the company had aimed to raise as much as $2.7 billion by selling 49 million shares at a price range of $47 to $55 per share. However, facing weaker-than-expected demand and market caution, CoreWeave revised its offering. It is now offering 37.5 million shares at a significantly lower price of $40 per share, nearly 23% fewer shares than originally planned and well below the earlier price range.
This adjustment means CoreWeave is set to raise about $1.5 billion from the IPO, valuing the company at around $23 billion on a fully diluted basis. This is a noticeable drop from the $32 billion valuation it was initially targeting.
NVIDIA, which is one of CoreWeave’s largest backers and technology partners, is stepping in to support the IPO. The tech giant has committed to purchasing $250 million worth of shares at the offering price, providing a much-needed vote of confidence amid shaky market sentiment.
However, investor enthusiasm for the IPO has been lukewarm, largely because of concerns over CoreWeave’s financial structure and its dependency on a few major customers. One of the biggest red flags for investors is the company’s heavy reliance on Microsoft, which accounts for a significant chunk of CoreWeave’s revenue. There is growing concern that Microsoft’s evolving AI data center strategy could affect long-term demand for the type of GPU-heavy infrastructure that CoreWeave provides.
Another factor holding back investor appetite is CoreWeave’s highly capital-intensive business model. Building and operating large-scale data centers equipped with high-performance GPUs requires massive amounts of cash. CoreWeave currently leases its 32 data centers and much of its equipment, leading to about $2.6 billion in lease liabilities. On top of that, the company reported debt of roughly $8 billion as of last year and continues to rely heavily on borrowing to fund its expansion. About $1 billion of the IPO proceeds is expected to go toward paying down some of this debt, though the company has also stated it plans to continue borrowing in the future to grow its infrastructure.
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Perhaps the biggest sticking point for cautious investors is that CoreWeave has yet to turn a profit. In 2024 alone, the company reported a net loss of nearly $863 million. Although its revenue has been growing rapidly, much of that growth has been fueled by aggressive expansion, partnerships, and increasing capital expenditure. And with the global economic climate being volatile, investors are currently wary of putting money into unprofitable, debt-heavy companies, no matter how promising the sector may be.
That said, CoreWeave has made strategic moves to secure its position in the AI infrastructure market. Ahead of the IPO, the company inked a massive five-year, $11.9 billion deal with OpenAI, the creators of ChatGPT, to provide cloud infrastructure. As part of this agreement, OpenAI will also receive $350 million worth of CoreWeave shares through a private placement during the IPO. These partnerships with major players like NVIDIA, Microsoft, and OpenAI position CoreWeave as a key enabler of the AI revolution.
But the overall investor sentiment signals something deeper, there appears to be a shift in how the market is valuing AI infrastructure companies. While the AI boom over the last two years has created huge demand for data center capacity and GPUs, some analysts believe that this growth may not sustain at the same pace. Big companies like Microsoft, Google, and Amazon may continue to pour billions into AI infrastructure, but smaller players might struggle to keep up, and the broader market is now recalibrating expectations.
Additionally, the emergence of cheaper AI competitors, such as China’s DeepSeek, has introduced fresh worries about the long-term profitability of expensive, GPU-based cloud platforms like CoreWeave.
CoreWeave’s IPO was seen as a bellwether for both the IPO market and the broader AI industry. Its scaled-back debut sends a clear signal: investors are becoming more selective, no longer chasing every AI-related stock without carefully weighing the risks.
While CoreWeave’s business model is not fundamentally broken—it holds strategic partnerships and strong technical infrastructure, the company now faces the challenge of balancing its rapid growth with financial stability. The IPO’s outcome underlines the fact that even in the middle of an AI gold rush, investor caution is starting to catch up with sky-high valuations.
