CoreWeave, a cloud-based company providing access to data centers and high-powered chips for artificial intelligence (AI) workloads, is pushing back on concerns about the pace of investment in its sector. The company’s initial public offering (IPO) priced at $40 per share raised $1.5 billion for a valuation of $23 billion.
Despite this influx of capital, CoreWeave co-founder Brannin McBee expressed skepticism towards fears of an AI bubble. “Not that we see” any concerns among customers about the rapid investment in AI infrastructure, he said.
CoreWeave’s business model is built on providing services to major players like Microsoft and Nvidia, with which it has secured significant deals worth billions of dollars. However, investors are cautious due to concerns over debt financing and the potential for large language model builder OpenAI to cancel orders.
The company’s financial results have been solid, with sales rising to $1.9 billion last year and adjusted operating profits increasing to $1.2 billion. Nevertheless, analysts warn that CoreWeave is heavily leveraged, making it vulnerable to changes in market conditions.
Analysts also note that the three founders will control 70% of the voting rights, which may raise concerns about governance. As CoreWeave becomes one of the largest players in the new neocloud category, investors are left wondering if the company’s valuation is sustainable and what lies ahead for the pace of AI infrastructure build-out.
The IPO’s impact on market sentiment was evident with shares falling as much as 5.8% after opening trading.
Source: https://finance.yahoo.com/news/coreweave-co-founder-we-dont-understand-the-ai-bubble-fears-164641776.html