The AI industry has been a roller coaster ride, to put it lightly. Selling promises of an automation revolution, startups and established tech giants alike have courted billions in funding to fuel AI development. That’s led to early-adoption disasters, Wall Street burnouts, and a huge drop in support for AI from businesses around the globe.
Now, the sector faces its toughest challenge yet: the first ever pure-play AI startup to go public, CoreWeave.
Once an unknown player in the AI space, CoreWeave’s basic pitch is to provide processing infrastructure to AI companies. The startup rose to prominence on the back of deep-pocketed tech investors like Mark Klein, whose $25 million stake started an avalanche of investments from tech firms, hedge funds, and venture capitalists.
To those financiers, CoreWeave represents the “picks and shovels of the AI universe,” making this IPO a bellwether for future AI public offerings, as well as the health of the turbulent tech market more broadly. Though investors hope CoreWeave is to the AI revolution what Levi’s jeans were to the gold rush, the reality is looking closer to the disastrous WeWork IPO.
Initially meant to go public last week at a valuation of $35 billion, CoreWeave has since stalled its bid and signaled interest in dramatically scaling back its value. It’s now cutting its share prices down to the tune of a $23 billion valuation, according to Semafor, which notes that the company’s stock will begin trading tomorrow.
However, a quick peek under the hood reveals a company that’s far from ready for an IPO, let alone one this size, let alone one with the future of an entire industry riding on it. As tech critic Ed Zitron notes, the company’s form S-1 — something of a body cavity search companies have to file before going public — is damning, revealing a company whose future depends on “explosive growth” in the AI industry, and whose present is propped up by a single customer.
“CoreWeave’s S-1 tells the tale of a company that appears to be built for collapse, with over 60 percent of its revenue dependent on one customer, Microsoft,” writes Zitron.
Though that kind of tie-in with a tech monopoly could have benefits for a young company like CoreWeave, it also comes with huge risks, not least of which is that Microsoft cancels its contract and leaves it for dead.
That risk looked a little too real earlier this month, when the Financial Times reported that Microsoft had withdrawn from a number of formal agreements with the AI infrastructure company due to delivery problems and missed deadlines. CoreWeave has since denied that the tech giant reneged on any of its contracts, though that doesn’t change the fact that Microsoft is slashing data center leases across the US and Europe.
Any hope investors have for CoreWeave’s longevity is now riding on a recent OpenAI partnership and an eleventh-hour cash injection by Nvidia — the microchip giant that desperately needs this IPO to work — to stay afloat long enough for the “AI revolution” to play out.
How it all goes tomorrow is anyone’s guess. As Zitron notes, the entire venture is built on the dream that generative AI will become both a massive, profitable industry, and one that depends on massive data processing centers to thrive. That dream is looking more elusive by the day, as China’s DeepSeek model squashes support for the kind of AI development CoreWeave represents, and AI profits largely remain a fantasy.
With everything riding against it, CoreWeave should applaud itself for getting this far. As Zitron puts it: “if this company was in any other industry, it would be seen as [utterly rancid]. Except, it’s one of the standard bearers of the generative AI boom, and so, it exists within its own reality distortion field. “
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