Microsoft opted not to pursue a nearly $12 billion option to acquire additional data-center capacity from CoreWeave, signaling a shift in how large tech firms are adjusting their AI investments. OpenAI secured the contract last week, emphasizing the growing demand for AI resources.
CoreWeave prepares for IPO amid market scrutiny
CoreWeave is aiming for an IPO that seeks to raise up to $2.7 billion, the first significant public offering for a dedicated artificial intelligence company since the release of ChatGPT in 2022. This IPO is seen as a crucial test for the AI sector’s health.
Reports earlier this month indicated that Microsoft had “walked away from some of its commitments,” a claim that CoreWeave disputes. Investors expressed concern in February after an analyst suggested Microsoft was retracting its datacenter leases, which the company strongly denied.
Despite these developments, Microsoft plans to maintain its substantial investment in AI, stating it will allocate $80 billion. Satya Nadella, Microsoft’s CEO, reassured viewers on CNBC that the company remains committed to this budget, suggesting that the decision regarding CoreWeave reflects a more strategic approach to spending rather than a reduction in AI efforts.
OpenAI’s CEO, Sam Altman, acknowledged CoreWeave as one of its premier compute partners, noting that its computing capabilities were instrumental in developing several of OpenAI’s prominent models. He stated in CoreWeave’s roadshow video that the company has innovated in hardware and data center construction to deliver rapid results.
Analyst Jeffrey Emanuel raised concerns about CoreWeave’s business model, likening it to WeWork, which faced challenges with debt payments during the COVID-19 pandemic due to its leasing strategies. In contrast, Arthur Mensch, CEO of Mistral AI, indicated that their company is not considering an IPO at this time.
Featured image credit: Demure Storyteller/Unsplash
