Microsoft‘s massive investment in OpenAI has put the company at the center of the artificial intelligence boom. But it’s not the only place where the software giant is opening its wallet to meet the surging demand for AI-powered services.
CNBC has learned from people with knowledge of the matter that Microsoft has agreed to spend potentially billions of dollars over multiple years on cloud-computing infrastructure from startup CoreWeave, which announced on Wednesday that it raised $200 million. That financing comes just over a month after the company attained a valuation of $2 billion.
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CoreWeave sells simplified access to Nvidia’s graphics processing units, or GPUs, which are considered the best available on the market for running AI models. Microsoft signed the CoreWeave deal earlier this year in order to ensure that OpenAI, which operates the viral ChatGPT chatbot, will have adequate computing power going forward, said one of the people, who asked not to be named due to confidentiality. OpenAI relies on Microsoft’s Azure cloud infrastructure for its hefty compute needs.
Microsoft and CoreWeave both declined to comment.
The generative AI rush began late last year after OpenAI introduced ChatGPT to the public, demonstrating that AI can take human input and produce sophisticated responses. Many companies, including Google, have since rushed to add generative AI into their products. And Microsoft has been busy releasing chatbots for its own services, such as Bing and Windows.
With so much demand for its infrastructure, Microsoft needs additional ways to tap Nvidia’s GPUs. CoreWeave CEO Michael Intrator declined to comment about the Microsoft deal in an interview last month, but he said revenue has “gone up by many multiples from 2022 to 2023.”
Nvidia-backed startup Coreweave is based in Roseland, New Jersey, with 160 employees.
CoreWeave
CoreWeave’s announced funding on Wednesday from hedge fund Magnetar Capital was an extension of a $221 million round in April. Nvidia invested $100 million in the prior financing, Intrator said. CoreWeave was founded in 2017 and has 160 employees.
Nvidia’s stock price is up 170% this year. The company’s market cap briefly topped $1 trillion for the first time this week after it issued a forecast for the July quarter that was over 50% higher than Wall Street estimates.
The chipmaker’s growth will “largely be driven by data center, reflecting a steep increase in demand related to generative AI and large language models,” Colette Kress, Nvidia’s finance chief, said on last week’s earnings call. OpenAI’s GPT-4 large language model, trained with Nvidia GPUs on extensive online data, is at the core of ChatGPT.
Kress referred to CoreWeave by name on the call, and in March, Nvidia CEO Jensen Huang mentioned CoreWeave in his presentation at Nvidia’s GTC conference.
CoreWeave’s website claims the company can deliver computing power that’s “80% less expensive than legacy cloud providers.” Among other cards, CoreWeave offers Nvidia’s A100 GPUs, which developers can also find through the Amazon, Google and Microsoft clouds.
In addition, CoreWeave has available less expensive Nvidia A40 GPUs that are marketed for visual computing, while the A100 targets AI, data analytics and high-performance computing. Some CoreWeave clients have struggled to obtain enough GPU power on big clouds, Intrator said. At times prospects have asked for A100 or newer H100 GPUs from Nvidia, and the company has instead recommended A40 GPUs.
These “will do an excellent job at a very cost-effective price,” Intrator said.
Microsoft has had discussions with Oracle about the two companies renting servers from each other if they need added capacity, The Information reported earlier this month, citing an unnamed person.
Paxton sued Google in 2022 for allegedly unlawfully tracking and collecting the private data of users.
The attorney general said the settlement, which covers allegations in two separate lawsuits against the search engine and app giant, dwarfed all past settlements by other states with Google for similar data privacy violations.
Google’s settlement comes nearly 10 months after Paxton obtained a $1.4 billion settlement for Texas from Meta, the parent company of Facebook and Instagram, to resolve claims of unauthorized use of biometric data by users of those popular social media platforms.
“In Texas, Big Tech is not above the law,” Paxton said in a statement on Friday.
“For years, Google secretly tracked people’s movements, private searches, and even their voiceprints and facial geometry through their products and services. I fought back and won,” said Paxton.
“This $1.375 billion settlement is a major win for Texans’ privacy and tells companies that they will pay for abusing our trust.”
Google spokesman Jose Castaneda said the company did not admit any wrongdoing or liability in the settlement, which involves allegations related to the Chrome browser’s incognito setting, disclosures related to location history on the Google Maps app, and biometric claims related to Google Photo.
Castaneda said Google does not have to make any changes to products in connection with the settlement and that all of the policy changes that the company made in connection with the allegations were previously announced or implemented.
“This settles a raft of old claims, many of which have already been resolved elsewhere, concerning product policies we have long since changed,” Castaneda said.
“We are pleased to put them behind us, and we will continue to build robust privacy controls into our services.”
Virtual care company Omada Health filed for an IPO on Friday, the latest digital health company that’s signaled its intent to hit the public markets despite a turbulent economy.
Founded in 2012, Omada offers virtual care programs to support patients with chronic conditions like prediabetes, diabetes and hypertension. The company describes its approach as a “between-visit care model” that is complementary to the broader health-care ecosystem, according to its prospectus.
Revenue increased 57% in the first quarter to $55 million, up from $35.1 million during the same period last year, the filing said. The San Francisco-based company generated $169.8 million in revenue during 2024, up 38% from $122.8 million the previous year.
Omada’s net loss narrowed to $9.4 million during its first quarter from $19 million during the same period last year. It reported a net loss of $47.1 million in 2024, compared to a $67.5 million net loss during 2023.
The IPO market has been largely dormant across the tech sector for the past three years, and within digital health, it’s been almost completely dead. After President Donald Trump announced a sweeping tariff policy that plunged U.S. markets into turmoil last month, taking a company public is an even riskier endeavor. Online lender Klarna delayed its long-anticipated IPO, as did ticket marketplace StubHub.
But Omada Health isn’t the first digital health company to file for its public market debut this year. Virtual physical therapy startup Hinge Health filed its prospectus in March, and provided an update with its first-quarter earnings on Monday, a signal to investors that it’s looking to forge ahead.
Omada contracts with employers, and the company said it works with more than 2,000 customers and supports 679,000 members as of March 31. More than 156 million Americans suffer from at least one chronic condition, so there is a significant market opportunity, according to the company’s filing.
In 2022, Omada announced a $192 million funding round that pushed its valuation above $1 billion. U.S. Venture Partners, Andreessen Horowitz and Fidelity’s FMR LLC are the largest outside shareholders in the company, each owning between 9% and 10% of the stock.
“To our prospective shareholders, thank you for learning more about Omada. I invite you join our journey,” Omada co-founder and CEO Sean Duffy said in the filing. “In front of us is a unique chance to build a promising and successful business while truly changing lives.”
Liz Reid, vice president, search, Google speaks during an event in New Delhi on December 19, 2022.
Sajjad Hussain | AFP | Getty Images
Testimony in Google‘s antitrust search remedies trial that wrapped hearings Friday shows how the company is calculating possible changes proposed by the Department of Justice.
Google head of search Liz Reid testified in court Tuesday that the company would need to divert between 1,000 and 2,000 employees, roughly 20% of Google’s search organization, to carry out some of the proposed remedies, a source with knowledge of the proceedings confirmed.
The testimony comes during the final days of the remedies trial, which will determine what penalties should be taken against Google after a judge last year ruled the company has held an illegal monopoly in its core market of internet search.
The DOJ, which filed the original antitrust suit and proposed remedies, asked the judge to force Google to share its data used for generating search results, such as click data. It also asked for the company to remove the use of “compelled syndication,” which refers to the practice of making certain deals with companies to ensure its search engine remains the default choice in browsers and smartphones.
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The DOJ also proposed the company divest its Chrome browser but that was not included in Reid’s initial calculation, the source confirmed.
Reid on Tuesday said Google’s proprietary “Knowledge Graph” database, which it uses to surface search results, contains more than 500 billion facts, according to the source, and that Google has invested more than $20 billion in engineering costs and content acquisition over more than a decade.
“People ask Google questions they wouldn’t ask anyone else,” she said, according to the source.
Reid echoed Google’s argument that sharing its data would create privacy risks, the source confirmed.
Closing arguments for the search remedies trial will take place May 29th and 30th, followed by the judge’s decision expected in August.
The company faces a separate remedies trial for its advertising tech business, which is scheduled to begin Sept. 22.