OpenAI Invests $12B in CoreWeave as Part of Strategic Move with Microsoft
OpenAI’s Significant Partnership with CoreWeave
In a landmark decision, OpenAI has signed an impressive five-year agreement worth $11.9 billion with CoreWeave, a cloud service provider specializing in GPU resources. This deal was confirmed by CoreWeave through a press release and reported by Reuters. As part of this arrangement, OpenAI will also receive $350 million in equity from CoreWeave, which is separate from the company’s plans to go public.
CoreWeave’s Move Towards IPO
Recently, CoreWeave has filed to become a publicly traded company, although details about its pricing and debut date are still pending. This partnership with OpenAI marks a pivotal moment for both companies, especially considering that Microsoft was previously CoreWeave’s largest client, contributing a significant 62% of its revenue in 2024. CoreWeave’s revenue surged to approximately $1.9 billion, a massive increase from just $228.9 million in 2023, showcasing its rapid growth trajectory.
CoreWeave has gained backing from Nvidia, which owns a 6% stake in the company. The firm operates an AI-focused cloud service with a network of 32 data centers that host more than 250,000 Nvidia GPUs. Recently, the company has incorporated Nvidia’s latest Blackwell GPUs, which enhance AI reasoning capabilities.
Addressing Investor Concerns
Relying heavily on a single client, in this case, Microsoft, could have raised red flags for investors during CoreWeave’s anticipated IPO. However, securing OpenAI as a direct customer in a multi-billion-dollar deal is likely to assuage any investor worries, giving the company a stronger position in the market.
The Evolving Dynamic Between Microsoft and OpenAI
This move adds another layer to the complex relationship between OpenAI and Microsoft, which can be best described as "frenemies." Sam Altman, OpenAI’s CEO, seems to be taking steps to assert OpenAI’s independence by partnering with CoreWeave, which Microsoft had previously used. This new deal implies that OpenAI will not only utilize CoreWeave’s cloud resources but also have ownership in the infrastructure.
Microsoft is a significant financial supporter of OpenAI, receiving a portion of the company’s revenue as part of their agreement. However, competition between the two has been growing. OpenAI has been actively pursuing enterprise customers, potentially threatening Microsoft’s market dominance. Just last month, Altman expressed concerns about OpenAI’s resource limitations, specifically mentioning a shortage of GPUs.
Meanwhile, Microsoft is developing its own line of AI reasoning models, which are designed to compete with OpenAI’s offerings. It has even hired Altman’s rival, Mustafa Suleyman, to lead its AI initiatives.
CoreWeave’s Unique Background
CoreWeave has an intriguing history, originally starting as a cryptocurrency mining enterprise founded by former hedge fund professionals. The company’s co-founders have already liquidated a considerable amount of stock, totaling $488 million, with each of them receiving over $150 million. Despite this financial success, CoreWeave carries a significant debt burden of $7.9 billion.
If the company’s IPO fundraising succeeds, it plans to allocate some of that capital toward reducing its debts. While these co-founders transitioned from using GPUs for crypto mining to leveraging them for AI services, their strategy has proven remarkably effective in the evolving tech landscape.
OpenAI has yet to provide any public comments regarding this partnership.
