CoreWeave Inc. said on Tuesday it has struck an agreement to supply Meta Platforms Inc. with up to $14.2 billion of artificial intelligence cloud infrastructure, underscoring the steep costs associated with building and deploying advanced AI models.
Shares of CoreWeave jumped more than 13% on market open after the announcement, extending a rally that has seen the stock triple in value since its March initial public offering.
Chief Executive Officer Michael Intrator said the deal followed earlier contracts with the Facebook parent.
“They loved our infrastructure in earlier contracts and came back for more,” he said in an interview, according to Bloomberg.
Nvidia systems at the heart of expansion
Under the agreement, CoreWeave will provide Meta with access to Nvidia Corp.’s latest GB300 systems, which are in high demand across the industry.
The partnership comes only days after CoreWeave extended its agreement with OpenAI by $6.5 billion, bringing the total value of its contracts with the ChatGPT developer to $22.4 billion.
Together, the announcements highlight the role of emerging “neoclouds” such as CoreWeave, Nebius Group and Nscale Global Holdings in powering the AI boom.
“The agreement underscores that behind every AI breakthrough are the partnerships that make it possible,” a CoreWeave spokesperson said in a statement about the deal, CNBC said.
Diversifying away from Microsoft dependence
The deal with Meta marks an important step in reducing CoreWeave’s reliance on Microsoft Corp., historically its largest customer.
In the June quarter, Microsoft accounted for 71% of the company’s revenue.
“When we came out in the IPO, we got dinged because of our customer concentration,” Intrator said.
“This is clearly a step in the right direction for diversification.”
Meta has become one of the largest spenders in the sector, with CEO Mark Zuckerberg earmarking up to $72 billion in capital expenditures this year to build out AI infrastructure and data centers.
Debt-driven growth strategy
CoreWeave, like other neocloud operators, relies heavily on debt financing to fund its capital-intensive expansion.
Intrator confirmed the company will continue tapping debt markets as it builds new capacity.
The approach mirrors that of larger cloud providers, which have increasingly raised funds for data center projects through bond offerings.
Meta recently secured $29 billion to finance a massive data center in Louisiana, while Oracle Corp. raised $18 billion last week to support infrastructure development for OpenAI.
Analysts weigh upside and risks
Despite the meteoric rise in CoreWeave’s share price, analysts remain divided on the outlook.
Evercore ISI analyst Amit Daryanani initiated coverage on Tuesday with an “outperform” rating and a $175 price target, suggesting around 40% upside from current levels.
He argued that demand for AI infrastructure continues to far outpace supply, which should underpin revenue growth.
He also noted that a lower interest-rate environment would reduce the cost of building and operating facilities.
Daryanani highlighted CoreWeave’s technology advantage, describing its platform as designed specifically for AI workloads.
This, he said, makes it more efficient than traditional hyperscale cloud providers and positions the company to serve not only AI-centric firms but also enterprises looking to deploy AI applications.
Still, concerns persist about the company’s concentration risk.
Nearly 80% of CoreWeave’s revenue last quarter was tied to Microsoft and OpenAI, with a significant portion of Microsoft’s AI business linked to OpenAI’s compute needs.
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