In another chess move with Microsoft, OpenAI is pouring $12B into CoreWeave

OpenAI commits $11.9B in a deal with CoreWeave, broadening its cloud access amidst Microsoft tensions.

: OpenAI has agreed to a five-year, nearly $12 billion deal with CoreWeave, a GPU-heavy cloud service firm, securing $350 million in equity in CoreWeave. CoreWeave, which previously counted Microsoft as its biggest client, reported $1.9 billion in revenue in 2024, primarily from Microsoft, before OpenAI entered as a customer. The relationship between OpenAI and Microsoft seems strained as OpenAI also pursues more compute resources, having recently claimed it was 'out of GPUs.' CoreWeave, underpinned by Nvidia, originated as a crypto mining venture and carries significant debt, hoping to offset it with IPO proceeds.

OpenAI's new commitment involves a momentous $11.9 billion agreement with CoreWeave, a cloud service provider renowned for deploying a vast number of GPUs, further emphasizing the increasing significance of AI-specific infrastructures. According to information revealed by Reuters, OpenAI has also secured $350 million worth of equity in CoreWeave, marking a strategic maneuver that could potentially solidify its position in AI. This agreement could reshape existing dynamics between these key players, as prior to this, Microsoft stood as CoreWeave’s central customer, contributing to 62% of its 2024 revenue, estimated at $1.9 billion, a substantial jump from the previous year's $228.9 million.

CoreWeave's collaboration with Nvidia, holding a 6% stake, underscores its robust AI-enhanced infrastructure. The service provider has expanded its network to 32 data centers equipped with over 250,000 Nvidia GPUs. This expansion includes the adoption of Nvidia's Blackwell GPUs designed for more efficient AI reasoning. Significant growth in GPU deployment plays a pivotal role in addressing increasing demands for computing power in AI technologies.

The reported tensions between OpenAI and Microsoft cast a spotlight on their evolving and competitive relationship. Not only does OpenAI’s agreement with CoreWeave signal a strategic move away from exclusive reliance on Microsoft, but it also reflects broader ambitions to expand computing capacities. Earlier, in a significant shift, OpenAI ceased relying solely on Microsoft's cloud infrastructure as part of a larger deal involving SoftBank and Oracle dubbed the Stargate AI infrastructure.

CoreWeave's journey from its initial phase as a crypto mining venture to becoming a major player in AI infrastructure highlights transformative industry trends. The company, founded by former hedge fund experts, navigated through substantial debt, currently documented at $7.9 billion. Co-founders have strategically monetized their shares, adding an intriguing layer of financial maneuvering as they look to their IPO to raise additional capital, anticipating the funds will help alleviate some of the financial strain.

Among industry observers, including OpenAI’s CEO Sam Altman, this extensive deal with CoreWeave appears as a bold chess move. As Microsoft continues to pursue its own competitive AI models and internal projects, the evolving strategies between these tech giants reflect broader shifts and realignments within the ever-expanding field of AI services.

Sources: Reuters, Forbes, TechCrunch, CNBC, Business Insider.

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