CoreWeave IPO: Nvidia-backed AI startup valued at $23 billion in muted Nasdaq listing; How does this fare for US IPOs?

CoreWeave’s shares closed flat after opening nearly 3% below their offer price in its Nasdaq debut on Friday, giving the Nvidia-backed AI infrastructure firm a valuation of $23 billion on a fully diluted basis.

The lackluster performance could crush hopes of a meaningful recovery in IPOs, especially when equity markets are grappling with tariff-related turmoil.

Wall Street stocks closed sharply lower on Friday, with the tech-heavy Nasdaq falling 2.7%.

It could also dampen sentiment towards AI infrastructure amid rising uncertainty over Big Tech’s massive spending spree and fears of competition from lower-cost options such as China’s AI startup DeepSeek, which require fewer chips.

The stock opened for trading at $39, compared with the IPO price of $40. CoreWeave had already taken a hit on Thursday, when it had to downsize its initial public offering.

“I don’t know how receptive the market’s going to be,” said Kamran Ansari, managing partner at Kapital Ventures, noting that while the company’s growth has been meteoric, its long-term sustainability is yet to be tested.

Nvidia contributed a $250-million order as part of CoreWeave’s IPO, which raised $1.5 billion, Reuters reported on Thursday.

Despite the downsize, the IPO was the largest AI-related listing by amount raised according to Dealogic, which has compiled data as far back as 1995.

Investors have previously driven AI-related companies such as Oracle and Microsoft to lofty valuations. Yet, both companies, which markets may view as comparables to CoreWeave, have fallen 13% and 7% this year, respectively.

CoreWeave sparked worries among risk-averse investors during its roadshow as they weighed its long-term growth prospects, financial risks and capital intensity in a volatile market.

“The infrastructure that you need to build and deliver artificial intelligence is one of the true super cycles that exist,” CoreWeave CEO Mike Intrator said in an interview with Reuters.

“Working with the clients who are building the infrastructure that will drive artificial intelligence, there has been no reduction in demand.”

Livingston, New Jersey-based CoreWeave provides access to data centers and high-powered Nvidia chips, which have become the most sought-after resource in the race to develop AI applications.

However, 77% of CoreWeave’s revenue last year came from just its top two customers, including Microsoft.

At its roadshow, some expressed worries about CoreWeave’s heavy reliance on Microsoft as the tech behemoth’s shifting AI data center strategy could impact long-term demand for chips.

“The OpenAI contract… materially decreases the single client concentration, and we’ll continue to do that over the next several years,” Intrator told Reuters when asked about these concerns.

CoreWeave signed a five-year contract worth $11.9 billion with OpenAI in the lead-up to the IPO, Reuters first reported earlier this month, forging ties with the most prominent startup in the industry.

The company’s executives also said their contracts with Microsoft haven’t changed and they haven’t seen any commitments canceled or withdrawn by the cloud giant.

Founded as an Ethereum-focused crypto miner in 2017, CoreWeave pivoted to AI a few years later. It shuttered its mining business after “The Merge”, Ethereum’s 2022 upgrade, slashed rewards for miners.

CoreWeave’s revenue has grown at breakneck speed, climbing more than eight-fold last year.

The company had around $8 billion in debt as of last year. It said earlier this month that it plans to use about $1 billion of the IPO proceeds to repay debt.

It also leases its 32 data centers and some equipment instead of owning them, resulting in operating lease liabilities of $2.6 billion.

The IPO was underwritten by a syndicate of 18 banks, led by Morgan Stanley, JPMorgan and Goldman Sachs.