Nvidia-backed CoreWeave targets up to US$32 billion valuation in test for AI IPOs

CoreWeave is targeting a valuation of up to US$32 billion on a fully diluted basis in its US initial public offering, as the Nvidia-backed startup bets on strong demand for generative artificial intelligence.

The listing is seen as crucial to the revival of a largely moribund US initial public offering 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 US$47 and US$55 each to raise as much as US$2.7 billion in the offering, the company said on Thursday.

Reuters was the first to report the terms this week.

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 US$11.9 billion infrastructure contract with the ChatGPT maker.

CoreWeave, which provides access to data centres and high-powered chips for AI workloads, mainly supplied by Nvidia, will issue shares worth US$350 million to OpenAI through a private placement in the IPO.

Nvidia currently owns 5.96 per cent of CoreWeave's Class A shares, which is expected to be reduced to 5.05 per cent after the offering.

The company has about 583 million fully diluted shares outstanding, according to a person familiar with the matter.

Based on the total number of shares listed in the filing, its targeted valuation was US$26 billion at the top end of the range.

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 centres can outpace traditional cloud giants.

Nvidia rival Cerebras is also reportedly readying a 2025 listing, while data centre operator Switch is weighing an IPO at a valuation of about US$40 billion, Reuters reported in September.

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-centre leases tempered the once red-hot demand.

"There are growing concerns that the explosion in AI-related data centre 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 US$3 billion in its share sale at a valuation topping US$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."