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CoreWeave Inc. (NASDAQ: CRWV) announced a new agreement with OpenAI valued at up to $6.5 billion. The deal increases the total value of CoreWeave’s contracts with the ChatGPT developer to approximately $22.4 billion.
The new contract is the third expansion of their cooperation this year. In March, the companies entered into a deal worth up to $11.9 billion and another worth up to $4 billion in May. The ongoing cooperation shows the increased need for high-performance computing resources to facilitate the development of artificial intelligence.
CoreWeave is focused on cloud computing infrastructure that supports machine learning models that are CPU-intensive to develop and deploy, like machine learning models. According to the company, this new deal will offer OpenAI more computing power to fulfill the demands of its second-generation AI systems.
CoreWeave stock experienced volatility after the announcement. The shares fell by 5% in premarket trading on Thursday but rebounded quickly, gaining over 1% in the first hour after the opening bell. Analysts explained the movement by saying that the market was adjusting itself, with the investors evaluating the size and implications of the new contract.
The company’s stock has surged more than 230% since its initial public offering in March, reflecting strong investor confidence in its role as a core AI infrastructure provider.
However, some analysts have warned about the risks of customer concentration. Research firm Hedgeye noted that OpenAI and NVIDIA might become CoreWeave’s primary clients by 2027, raising concerns regarding revenue dependency.
This update on one of the newest OpenAI partnerships comes as the tech giant focuses on its large-scale infrastructure project, Stargate. The AI company announced the expansion of its data center in Abilene, Texas, with three additional data centers in collaboration with Oracle in a deal worth $300 billion. Stargate has set a goal of 10 gigawatts of computing capacity by year's end, which is an investment that may amount to $500 billion.
Meanwhile, NVIDIA entered a new deal with OpenAI to construct at least 10 gigawatts of AI information centers, in which the chipmaker is promised to invest up to $100 billion. NVIDIA also holds over 5 percent of CoreWeave and has, in the past, provided the company with high-value hardware orders.
CoreWeave actively works on its ecosystem expansion as well. Its current acquisitions of OpenPipe and Weights and Biases show that it is focused on building a stronger AI technology stack and providing more comprehensive solutions to clients. The company has also invested heavily in AI development in the UK and established a venture arm to assist start-ups.
The broadened collaboration with OpenAI proves that CoreWeave is increasingly becoming a provider of the infrastructure to support the most developed AI workloads. It also emphasizes the growth of capital requirements of the given industry.
