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The Demand for CoreWeave is Unstable

In the past two months, I have seen a significant uptick in the capital markets. The pivotal point in the American economy was President Trump’s inauguration. Interest rates have been dropping, inflation is going down and the capital markets are picking up. The tow major signs of this have been the ramp of IPOs and M&A deals.

Now you’ve probably heard of several major deals that were announced in March 2025. Two notable ones that caught my attention were the Klarna and CoreWeave IPOs.

Klarna was interesting because fintech has been dead for two years. Plus they were the first major public company to integrate A.I. into their business model. That meant an OpenAI partnership in 2023 and then ripping out their HR/CRM software providers.

While Klarna has most of my attention, today I want to focus on CoreWeave because of its unique situation.

CoreWeave’s financing is telling a story

CoreWeave is a cloud computing company specializing in A.I. by renting out Nvidia GPUs to enterprise customers. It is a popular reseller business model that has worked in previous technology cycles. Think PC resellers and software vendors like CDW and TD Synnex. These are low margin businesses but produce significant cash flows as IT distributors.

Now CoreWeave is an infrastructure play that is trading with the ticker $CRWV. As of today, it is the largest U.S. venture-backed tech IPO in nearly four years.

The problem with this $23 billion company is that the IPO lost significant interest from investors before listing. It only raised $1.5 billion, falling short of the original target of up to $3 billion. This has been a test for investor appetite in AI stocks amidst broader market volatility. While A.I. remains a hot sector, investor skepticism persists due to competition from lower-cost models by Chinese firms like DeepSeek.

Revenue has more than 7x’d in 2024, reaching $1.92 billion but producing a net loss of $863 million during the same period.

The major concern is that CoreWeave relies heavily on Nvidia GPUs for its A.I. data centers and has signed an $11.9 billion contract with OpenAI. Microsoft also accounts for 62% of its 2024 revenue, raising concerns about dependency. This is a significant customer concentration risk. On top of that, CoreWeave has taken on significant debt to scale operations, which includes managing over 250,000 Nvidia GPUs across 32 centers. As Nvidia continues to upgrade GPUs, the older hardware becomes obsolete.

Plus Nvidia played a crucial role in ensuring the IPO's success by purchasing $250 million worth of shares at the offering price. Without this support, CoreWeave might have struggled to launch its public offering.

CoreWeave faced significant hurdles on its IPO roadshow. Too much reliance on major partners like Microsoft and Nvidia has resulted in less investor confidence. At the moment, CoreWeave looks like a highly leveraged bet on AI infrastructure demand.

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