It’s easy to interpret CoreWeave’s lackluster IPO and muted first day of trading on Friday as bad news for the entire AI boom. But, as I’ll explain in a moment, that’s likely a mistake: many of CoreWeave’s problems are unique to CoreWeave.
First, you can see why some people might see CoreWeave as a proxy for AI as a whole. The New Jersey-based company’s entire business is running data centers full of the specialized Nvidia chips that customers need to run their AI workloads. CoreWeave is the first new “pure play” AI company to go public since OpenAI’s ChatGPT chatbot debuted in 2022, sparking the AI boom. Nvidia’s been public for decades, and arguably its valuation was bid to such lofty heights late last year that it had nowhere to go but down (Nvidia’s shares are down 20% year to date, but remain about 20% higher than they were at this time in 2024.) Other AI pure plays, such as OpenAI and Anthropic, are still private, while the Big Tech titans that have seen a big boost from AI have much more diversified revenue streams. So, if investors can’t get enthusiastic about a company like CoreWeave, then maybe the whole AI sector is in trouble. For those bearish on the technology, it seems like an open-and-shut case.
And CoreWeave certainly didn’t have the IPO it had initially hoped for. The company first talked about raising about $4 billion in equity at a selling point that would value the company at $35 billion. But due to lackluster investor interest, it wound up scaling that back to a $1.5 billion equity offering that valued the company at about $19 billion. In its first day of trading, the stock initially dropped from its IPO price of $40 per share, before recovering and bouncing around just above the IPO price. It was definitely not the blockbuster stock market debut that one might have expected for a company selling a key infrastructure component for tech’s newest new thing.
