CoreWeave (CRWV 1.58%) stock has had a bumpy start after it hit the public markets last week. Its initial public offering (IPO) wasn't well received on Friday, and the stock plunged in its first full day of trading yesterday.
Shares of the cloud infrastructure company are soaring today, however. The stock was up by 21.5% as of 1:45 p.m. ET, making it comfortably above its $40 IPO offering price. One reason for the pivot likely came thanks to strong quarterly results from artificial intelligence (AI) software infrastructure provider Progress last night. Another has more to do with CoreWeave itself.
A huge deal for CoreWeave
While Progress is a smaller company with a market cap of about $2.4 billion, the market is rewarding the provider of AI-powered digital experience and infrastructure software for a strong fiscal first quarter. Revenue soared 30% versus the prior-year period, showing that businesses continue to integrate the use of AI into enterprise IT (information technology) infrastructure.
NASDAQ: CRWV
Key Data Points
How does that relate to CoreWeave? While its IPO last week wasn't well received, mainly due to concerns its heavy debt load would weigh it down just as companies might start pulling back on AI infrastructure spending, Progress' report is a small sign that capital should continue to be spent as businesses see returns using AI infrastructure.
Investors may now be focusing more on a critical deal that CoreWeave announced prior to its IPO. The newly public company has an $11.9 billion contract with OpenAI to deliver AI infrastructure to expand OpenAI's compute capacity.
That one deal will go a long way to helping CoreWeave pay the debt it has incurred to grow the compute capacity it offers other AI companies. CoreWeave needs a strong and growing AI sector to succeed. It has what it needs in place for that to happen.
Another positive sign in the macro picture helped convince investors that its initial lackluster trading as a public company was an opportunity to get on board.
