Many market strategists have predicted a revival in initial public offerings (IPO) after a sluggish market over the last few years. While it still could take some time for the IPO market to thaw and the floodgates open, especially after recent turbulence in the market, more private companies are starting to emerge.
One recent company that announced plans to go public is the artificial intelligence infrastructure firm Coreweave (CRWV). Coreweave is reportedly seeking to raise $4 billion, which would value the company at $35 billion, making it one of the larger IPOs in recent years. Given how successful AI stocks have been, the company is likely to draw a lot of interest and is definitely one of the most eagerly anticipated IPOs in 2025. Here are three things you should know.
1. Data centers built for AI
Interestingly, Coreweave started as an infrastructure play targeting crypto miners. The company previously used data centers in New Jersey to mine Ethereum when the world's second-largest cryptocurrency used the energy-intensive proof-of-work mining system that required lots of computing power to mint new blocks of Ethereum and collect the associated rewards. However, when crypto crashed in 2018, Coreweave pivoted and now provides data centers made for supporting generative AI workloads.
Coreweave's data centers provide Nvidia's latest graphics processing units (GPU), liquid cooling capabilities, storage optimized for AI, and robust security. The company essentially provides infrastructure-as-a-service for companies looking to develop and roll out AI solutions and capabilities. Without Coreweave, many companies would be faced with building their own infrastructure, which is a significant undertaking and capital investment. At the end of 2024, Coreweave ran 32 data centers operating more than 250,000 GPUs.
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2. Financials are impressive
When popular tech and AI companies go public, you'll often notice that most are losing money and really don't have the best-looking set of financials, other than the promise of massive growth that will eventually turn into profits down the line. Coreweave is still not profitable and reported a loss of over $863 million in 2024.
However, the company had roughly $863 million of depreciation and amortization during the year, which makes the financials look much better on an operating basis. Coreweave reported operating income of over $324 million in 2024, a tremendous improvement from a $14.5 million operating loss in 2023. Meanwhile, revenue exploded roughly 740% in 2024.
This shows its capital investments are productive and generate significant revenue opportunities. Coreweave was able to scale significantly in 2024 due to increased customer demand. More than 95% of the new revenue was from existing customers. The company also estimates a long "estimated economic life of our infrastructure" that, coupled with multiyear contracts, has created attractive unit economics.
3. Microsoft made up 62% of revenue in 2024
In its registration statement, Coreweave said that it has initially gone after a small core group of customers, including Nvidia and Microsoft. This strategy has paid off so far. Microsoft made up 35% of total revenue in 2023 and then 62% of revenue in 2024. There are pros and cons to this approach. The pros are that one of the most influential tech companies in the world that will likely be a crucial player in AI in the future sees immense value in Coreweave's offerings. The downside, of course, is that if Microsoft decides to end the relationship, the company would find itself in a bind.
However, having such a large relationship with Microsoft is likely to attract other large tech companies wading into the world of AI and gives the company a certain amount of credibility when it pursues new customers. In fact, Reuters recently reported that Coreweave has inked a five-year, $11.9 billion deal with OpenAI, the company behind ChatGPT. As part of the deal, OpenAI will also acquire a stake in the company.
