Microsoft has walked away from some of its commitments with cloud computing provider CoreWeave in a significant blow to a company seeking to launch a blockbuster $35bn initial public offering next month.
CoreWeave provides Microsoft with computing capacity from data centres, which the tech giant uses to scale up powerful AI models such as OpenAI’s ChatGPT. The partnership is worth billions of dollars to CoreWeave.
However, Microsoft has withdrawn from some of its agreements over delivery issues and missed deadlines, according to people with knowledge of the matter.
While those people declined to discuss specific details about the abandoned services, one of them said the issues had an impact on Microsoft’s confidence in CoreWeave. They added that Microsoft retained a number of ongoing contracts with CoreWeave and it remained an important partner.
A shift in the relationship would be major hit to the New Jersey-based company, as Microsoft is its biggest customer by far. Earlier this week, CoreWeave filed for a New York IPO seeking to raise $4bn and expected to value the group at more than $35bn, in what could be the biggest stock market debut for a tech company this year.
In its IPO filings, CoreWeave warned that “any negative changes in demand from Microsoft, in Microsoft’s ability or willingness to perform under its contracts with us, in laws or regulations applicable to Microsoft or the regions in which it operates, or in our broader strategic relationship with Microsoft would adversely affect our business, operating results, financial condition, and future prospects.”
Microsoft has agreed to spend more than $10bn on CoreWeave services by 2030 under five contracts between the two companies. Deals with Microsoft represented 62 per cent of CoreWeave’s total revenues last year, according to public disclosures.
A former cryptocurrency mining operation, CoreWeave pivoted to providing cloud computing services for technology companies to build and train AI models using Nvidia’s high-performing graphics processing units (GPUs).
The group has amassed more than 250,000 of Nvidia’s AI GPUs, making it among the chipmaker’s biggest customers. Nvidia is also an investor in CoreWeave, owning more than 5 per cent of the company.
CoreWeave said it “has a consistent track record of delivering complex AI infrastructure at scale to some of the world’s leading AI labs and enterprises. Doing so has allowed us to earn and maintain the confidence of our customers.”
Microsoft and Nvidia declined to comment.
As part of its IPO filings, CoreWeave also pointed to the risk of “asymmetry” and “delays” in its supply chain related to its concentrated exposure to Nvidia, which supplies all of its chips.
The company said it had reduced control over costs and delays in its supply chain “such as the recent delays associated with Nvidia’s Blackwell GPUs”. In October, Nvidia chief Jensen Huang admitted that its new Blackwell chips had “design flaws” which had led to delays in shipping to customers.
Public filings as part of the IPO process show that CoreWeave has grown rapidly while accumulating large amounts of debt. It made $1.9bn of revenue in 2024, up from $229mn a year earlier and $16mn in 2022. However, the company also posted net losses of $863mn in 2024, $594mn in 2023 and $31mn in 2022.
CoreWeave has raised $14.5bn in debt and equity across 12 financings, including about $11bn of loans. It has become the pioneer of a flurry of asset-backed lending by Wall Street to technology companies with large volumes of AI chips.
Its largest investors are private equity firm Blackstone, which has loaned it about $5bn, hedge fund Magnetar Capital, which owns about 20 per cent of the company, and Fidelity, which manages funds that own about 8 per cent.
CoreWeave was founded under the name Atlantic Crypto by commodities traders Mike Intrator, Brian Venturo and Brannin McBee to mine the cryptocurrency ethereum, before pivoting to AI in 2019.
The three founders have each sold at least $150mn worth of their stock in the company since December 2023, according to the IPO filings. CoreWeave’s 10 directors and executives, including the three co-founders, collectively own about 30 per cent of the company but have more than 80 per cent of the voting rights.
Industry observers have said Microsoft’s data centre strategy has shifted this year after it ended an exclusivity deal with OpenAI on leasing its computing power.
TD Cowen analysts published a note last month saying Microsoft had withdrawn from two data centre leasing agreements, citing inquiries with supply chain providers.
In response to the Cowen report, Microsoft said its infrastructure spending plans remained on track. But Microsoft chief executive Satya Nadella said in a recent interview that there had been an “overbuild” of AI infrastructure.
Microsoft’s decision to walk away from some business with CoreWeave is unrelated to a broader shift in its own data centre plans, according to one of the people close to the matter. In January, the company said it would spend roughly $80bn in this fiscal year ending on June 30, seeking to build out the infrastructure necessary to train AI models and deploy applications.
On Wednesday, CoreWeave announced it had reached an agreement to acquire Weights and Biases, an AI developer platform start-up valued at $1.25bn in 2023.
