CoreWeave Secures $14.2 Billion AI Infrastructure Deal with Meta, Highlighting Surging Demand in AI Sector

CoreWeave Inks $14 Billion Meta Deal, Highlighting AI Demand

CoreWeave Inc. has signed a deal to supply Meta Platforms Inc. with as much as $14.2 billion worth of computing power, underscoring the massive costs of developing and running advanced AI models. "They loved our infrastructure in earlier contracts and came back for more," Chief Executive Officer Michael Intrator said in an interview. As part of the agreement, CoreWeave will provide the social media giant access to Nvidia Corp.'s latest GB300 systems, he said. Meta didn't provide comment. Bloomberg's Anurag Rana reports. (Source: Bloomberg)

Meta strikes expanded $14.2B AI infrastructure deal with CoreWeave - SiliconANGLE

Meta strikes expanded $14.2B AI infrastructure deal with CoreWeave Shares of the cloud data center company CoreWeave Inc. jumped more than 11% in regular trading today after it announced it has signed a new multibillion-dollar agreement with Meta Platforms Inc. to provide it with much-needed artificial intelligence compute infrastructure. The contract requires Meta to pay CoreWeave $14.2 billion for its AI infrastructure services over the next six years, with an option to extend the deal by an additional year, until December 14, 2032, the company said in a filing with the U.S. Securities and Exchange Commission today. It's a significant bounty for CoreWeave, and it comes at a time when big technology firms like Meta are scrambling to lock in access to the infrastructure they need to power their AI initiatives, boosting the value of companies that can provide it. CoreWeave is perfectly positioned to do just that. The company was virtually unheard of a year ago, but its rise has been astonishing. It has emerged as a key mover and shaker in the AI industry because it operates numerous data center facilities around the world that provide companies with access to the most treasured resource: graphics processing units, which power the majority of the world's AI workloads today. Through CoreWeave's cloud infrastructure, companies can access some of Nvidia Corp.'s most powerful new GPUs, which are designed to provide accelerated computing power for large language models. CoreWeave, which went public earlier this year, has spent billions of dollars on building up a network of data centers spanning North America and Europe. As of last year, it had 28 facilities up and running, with plans to complete 10 more by the end of this year. CoreWeave is rivalled by a number of other cloud infrastructure providers that are laser-focused on AI, including Nebius Group N.V., Lambda Inc., Crusoe Energy Systems LLC and Nscale Global Holdings Ltd., but it has emerged as the biggest name among that group. The expanded deal with Meta is crucial for CoreWeave because it's reliant on only a handful of customers. At present, the bulk of its revenue is thought to come from Microsoft Corp., although last week it announced it had expanded an existing deal with OpenAI to train its new models by $6.5 billion, bringing the total value of its contracts with the ChatGPT maker to $22.4 billion. CoreWeave also serves AI developers such as Cohere Inc. and Mistral, though its contracts with those companies are much smaller. In an interview with Bloomberg, CoreWeave Chief Executive Michael Intrator said today's deal will see it provide Meta with access to Nvidia's latest GB300 GPU systems. Those advanced chips are critical for the social media giant, which hopes to leverage AI to enhance the capabilities of new consumer products such as its newly launched Ray-ban smart glasses. Meta has spent tens of billions of dollars on expanding its access to data center infrastructure over the last few years. In April, it said it will increase its capital expenditure to $72 billion this year, with the majority of that being spent on AI data centers. The company is spending through the nose to try and remain at the forefront of AI model development, and not just on infrastructure. In addition, it has been spending millions in order to entice some of the world's top AI engineers to join its development teams.

CoreWeave's Valuation Soars on Meta Partnership, But Is It Overheating? | The Motley Fool

With the AI boom in full swing, that business model has led to jaw-dropping growth. In its second quarter, its revenue jumped 206% to $1.21 billion, showing how fast demand for its services is ramping up. Now, CoreWeave just got another shot in the arm as the stock jumped 12% on Tuesday after announcing another blockbuster deal, this time with Meta Platforms (META 1.30%). Meta is committing to spend up to $14.2 billion through 2032 on cloud computing capacity from CoreWeave, with an option to expand its commitment. The deal comes at a time when Meta has been ramping up its spending on AI, seeing it as a must-win for its future. In June, Meta acquired a 49% stake in Scale AI, a data-labeling start-up, and poached its CEO, Alexandr Wang, to run its new AI lab. On the same day that the CoreWeave news came out, Meta also announced that it's buying the chip start-up Rivos, which designs chips based on RISC-V architecture, an alternative to those used by leading CPU architecture designers Arm, Intel, and AMD. Rivos is also expected to help Meta build out full-stack AI systems. For CoreWeave, the deal builds on the earlier momentum it earned when it signed an expanded $6.5 billion agreement with OpenAI in September, bringing its total contract with OpenAI to $22.4 billion. The drumbeat of positive news for AI includes rival Nebius's $17 billion deal with Microsoft, Oracle's huge cloud computing forecast, and CoreWeave's own wins, including OpenAI, Meta, and a $6.3 billion deal with Nvidia, in which it will buy any of CoreWeave's unused capacity, effectively backstopping the company's growth. Those news items, and improving sentiment around CoreWeave, sparked a recovery in the stock last month. After falling by more than 50% from its peak in June, CoreWeave jumped more than 50% off its lows early in September. CoreWeave is a challenging stock to value. The company is delivering phenomenal top-line growth, but it's also reporting huge losses. The company's business model is risky. It's borrowing billions of dollars to buy Nvidia GPUs and build out the infrastructure to provide next-generation AI computing. That high-interest debt has also led CoreWeave to pay significant interest expense, set to be above $1 billion this year, essentially preventing CoreWeave from turning a profit. For most stocks, to determine an appropriate valuation, you just look at the numbers. However, CoreWeave is in a class of its own. Given its growth rate, in which revenue is still tripling, the upside potential for the stock is tremendous, and conventional cloud computing businesses like Amazon Web Services and Microsoft Azure have shown how profitable cloud computing can be at scale. Rather than parsing the numbers for CoreWeave to determine whether the stock is overvalued, investors are better off considering the future of the AI boom. If the massive capex buildout continues, including on CoreWeave's infrastructure, the stock is a good bet to be a winner. At a market cap of $66 billion, the stock still has room to move higher. However, if the AI boom turns into a bubble and spending suddenly slows, CoreWeave is likely to plunge. While it's locked in multi-billion-dollar deals with the likes of Meta, the company will need more of those to turn profitable and justify its current valuation. Either way, expect the volatility in the stock to continue.

CoreWeave Inks $14b Meta Deal, Highlighting AI Demand

CoreWeave Inc. (CRWV) has signed a deal to supply Meta Platforms Inc. with as much as $14.2 billion worth of computing power, underscoring the massive costs of developing and running advanced AI models. CoreWeave's stock has more than tripled in value since its March initial public offering as the race among major technology companies to build the most advanced AI models sends computing demand soaring. Co-host of Bloomberg Tech Ed Ludlow joined Carol Massar and Tim Stenovec on 'Bloomberg Businessweek Daily' to break it down. Bloomberg videos, provided by MT Newswires

CoreWeave Inks $14.2 Billion Deal With Meta for AI Cloud Infrastructure

CoreWeave inked a long-term artificial-intelligence cloud infrastructure agreement with Meta Platforms worth up to $14.2 billion. "The agreement underscores that behind every AI breakthrough are the partnerships that make it possible," CoreWeave said Tuesday, noting that it continues to win customers for its purpose-built AI cloud and technical expertise. The contract will extend through 2031, according to a recent Securities and Exchange Commission filing, though Meta will have the option to extend its comment for an additional year. CoreWeave shares jump 10%, to $134.22, in premarket trading.