CoreWeave said on Thursday it was targeting a valuation of up to $26 billion in its U.S. initial public offering, as the Nvidia (NVDA.O)-backed startup bets on strong demand for generative artificial intelligence.
The listing is seen as crucial to the revival of a largely moribund U.S. IPO market, as well as a gauge for investor appetite for new entrants in a sector that has propelled stock markets to record gains over the past two years.
The cloud services provider and some of its investors are looking to sell 49 million shares priced between $47 and $55 each to raise as much as $2.7 billion in the offering. Reuters was the first to report the terms on Wednesday.
Meanwhile, ahead of the IPO, CoreWeave had tied up with some of the biggest AI heavyweights, including Sam Altman's OpenAI. Last week, the company signed an $11.9 billion infrastructure contract with OpenAI.
CoreWeave, which provides access to data centers and high-powered chips for AI workloads, mainly supplied by Nvidia, will issue shares worth $350 million to the ChatGPT maker through a private placement in the IPO.
Nvidia currently owns 5.96% of CoreWeave's Class A shares, which is expected to be reduced to 5.05% after the offering.
LITMUS TEST
A strong CoreWeave debut could reignite confidence in IPOs and encourage more companies to go public, while a weak showing may aggravate concerns that appetite remains fragile despite improving market conditions.
With AI demand in focus, CoreWeave's IPO is expected to serve as a key test of whether investors believe specialized data centers can outpace traditional cloud giants.
The offering comes after the launch of Chinese startup DeepSeek's low-cost model and an analyst report that Microsoft had cut back on data-center leases tempered the once red-hot demand.
"There are growing concerns that the explosion in AI-related data center demand won't be as strong as previously thought, meaning investors will either demand a bargain price for CoreWeave shares or they might sit on the sidelines for now," Dan Coatsworth, investment analyst at AJ Bell, told Reuters.
The company, founded in 2017 as a crypto miner, had initially planned to raise over $3 billion in its share sale at a valuation topping $35 billion, sources told Reuters in November.
CoreWeave discontinued that business after Ethereum underwent an upgrade in 2022, called "The Merge", which reduced rewards for miners.
Morgan Stanley, J.P. Morgan and Goldman Sachs are the lead underwriters of the IPO. CoreWeave aims to trade on the Nasdaq under the ticker symbol "CRWV."
