CoreWeave shares reversed course to jump 5 per cent higher on Thursday, after the artificial intelligence cloud firm announced a new deal with OpenAI of up to $4 billion.
The ChatGPT maker will pay the Nvidia-backed data center operator through April 2029, CoreWeave said in a regulatory filing. CoreWeave also added a new hyperscaler as a client.
CoreWeave shares recouped all of their earlier losses, having slumped about 9 per cent in early trading after the company’s forecast that its annual capital expenditure would be about four times higher than predicted revenue in 2025.
The projection, made in CoreWeave’s first earnings since going public in March, shows companies are continuing to plough billions of dollars into AI even as investor scrutiny has sharpened after the launch of DeepSeek’s low-cost AI models.
“Investors were alarmed by the level of capital intensity for CoreWeave.” D.A. Davidson & Co analyst Gil Luria said.
“Signing more hyperscalers as customers is not really good news. Hyperscalers are direct competitors to CoreWeave and are only temporarily using CoreWeave for overflow capacity. They will likely go away once they have built out enough of their own data centers.”
CoreWeave, which leases computing capacity to technology companies and hyperscalers such as Microsoft, reported a more than five-fold increase in its first-quarter revenue to $981.6 million.
The management was optimistic about the demand for its services on the post-earnings call, but brokerage MoffettNathanson said “the cost of preparing to meet this demand may spook investors” who are paying a high price for the stock.
Big Tech firm Meta raised its annual capital expenditure forecast in April, while Alphabet reaffirmed it and a Microsoft executive also re-emphasized the company’s AI spending plans.
As of last close, CoreWeave’s stock surged 69 per cent from the offer price in its March IPO. At least seven brokerages have raised their price targets on the stock to between $50 and $80.
