The Scene
One cloud computing company is trying to cut through the economic noise to become a herald of the artificial intelligence IPO scene despite a soft market and few attempts by competitors.
Earlier this month, New Jersey-based CoreWeave filed with the US Securities and Exchange Commission a plan to list on the public market. While CoreWeave hasn’t disclosed its IPO date, The Information reported it expects to list later this month.
CoreWeave’s attempt comes during a massive slump in the IPO market. In the last three years, the number of tech companies entering the public market hit decade-lows. And while the overall IPO count crept upwards since 2022, it’s far from the bustling activity that marked years prior. Tumbling US stocks in recent weeks haven’t instilled confidence in the market either. Major stock indexes, including tech ETFs, are largely down on tariff and inflation concerns since President Donald Trump took office for the second time.
CoreWeave, which calls itself an “AI hyperscaler,” rents out GPUs, CPUs, and other computing equipment to tech companies so they don’t have to purchase and maintain their own. Its IPO would represent one of the first in recent years from a major company supporting the expansion of AI, making it a bellwether for both the tech industry and how the public market perceives AI in the years ahead.
In this article:
Step Back
There are a few recent tech IPOs investors can glean from when evaluating how CoreWeave might perform. British chip designer Arm listed in 2023 amid an IPO slump, raising $4.87 billion in the public offering — in the year’s largest IPO and a promising sign of the times. Arm is now trading at more than double its original sales price.
Social media company Reddit, which entered the public market last year, raised $748 million in its offering, another encouraging signal. Since the IPO, Reddit has announced a data licensing agreement with OpenAI, and its stock is up 250% since launch.
CoreWeave is reportedly looking to raise $4 billion at a $35 billion valuation. The year’s other AI IPO candidates include customer service tool provider Genesys, analytics platform Databricks, and chipmaker Cerebras. All three have reportedly delayed their IPO plans — on market volatility for the former two and in Cerebras’ case, a delayed US national security review of one of its investors.
The AI IPO market is still in the nascent stage, and it will likely take a few years to establish a robust pipeline of new publicly traded AI firms — especially a pipeline that some investors hope would include model heavyweights OpenAI and Anthropic. But these early listings can set the tone for how confident executives can be about their public market aspirations.
Know More
One of CoreWeave’s biggest risks to its IPO performance is the lack of diversification in its customer base. Last year, 62% of its $1.9 billion in revenue came from Microsoft, according to CoreWeave’s SEC filing — leaving it hugely exposed to the whims of one business. The Financial Times reported Microsoft recently pulled some of its commitments over delivery and deadline issues, though CoreWeave disputed that claim.
Just this week, CoreWeave added one more customer to its power hitter list after signing a five-year, $11.9 billion contract to supply AI infrastructure to OpenAI. If distributed evenly, CoreWeave’s annual income from that deal alone will surpass its total 2024 revenue, which grew nearly eightfold from 2023, largely on Microsoft’s business.
Room for Disagreement
While a company’s performance in its IPO can indicate where investor sentiment is at, it’s also one data point in a much larger story. For example, Uber’s stock market debut was largely seen as a disappointment due to profitability concerns and increased competition despite a booming market. Uber’s performance wasn’t necessarily indicative of the whole tech industry, with other companies — including Zoom and internet security provider Cloudflare — posting big gains in their IPOs that same year.