In a recent report from Reuters, CoreWeave reduced the size of its U.S. initial public offering and priced shares below the expected range, signaling weaker investor appetite for AI infrastructure IPOs. The Nvidia-backed company is now selling 37.5 million shares at $40 each, a 23.5% reduction from its original plan. This pricing is well below the earlier indicated range of $47 to $55. Of these shares, CoreWeave is offering 36.6 million, while existing shareholders are selling 910,000.
Nvidia has committed to anchoring the IPO with a $250 million order. The sale is expected to raise approximately $1.5 billion, valuing CoreWeave at around $23 billion on a fully diluted basis. However, the company’s roadshow received a weaker-than-expected response from investors concerned about its long-term growth prospects, financial risks, and capital-intensive business model.
A key concern is CoreWeave’s reliance on Microsoft, whose evolving AI data center strategy could impact demand for high-performance GPUs. While the company’s strong free cash flow has reassured some investors, questions remain about its ability to meet financial commitments. Additionally, its model of leasing data centers and equipment, rather than owning them, contributes to significant lease liabilities of $2.6 billion.
CoreWeave has deployed more than 250,000 Nvidia GPUs and plays a critical role in AI infrastructure. However, its IPO’s lukewarm reception may suggest a shift in market sentiment toward AI infrastructure valuations. Analyst Lukas Muehlbauer noted that while the business model is not fundamentally flawed, investors are adjusting their expectations.
Originally, CoreWeave and its investors sought to sell 49 million shares to raise as much as $2.7 billion, which would have valued the company at up to $32 billion. The revised offering reflects broader market uncertainty, as the IPO activity has slowed. Dealogic data shows that U.S.-listed equity capital market deals fell to 187 in the first quarter of this year, down from 243 a year ago, with total deal value dropping from $74 billion to $63.5 billion.
Despite the AI boom, concerns persist over uneven data center spending. While major players continue to invest, others struggle to keep pace. Additionally, competition from China’s DeepSeek, a low-cost AI alternative, has raised concerns about future growth in the sector.
CoreWeave had approximately $8 billion in debt as of last year and intends to use $1 billion from the IPO proceeds for debt repayment. The company has yet to turn a profit, adding to investor hesitancy, as recent IPOs have favored firms with proven profitability.
Ahead of the IPO, CoreWeave secured major partnerships, including a recent $11.9 billion infrastructure deal with OpenAI. As part of the offering, OpenAI will also receive $350 million in shares through a private placement.