Nvidia-backed CoreWeave gets $650 million credit line from top Wall Street banks
In this photo illustration, a Core Weave logo is displayed on a smartphone with stock market percentages on the background.
Omar Marques | SOPA Images | Lightrocket | Getty Images
CoreWeave, an Nvidia-backed artificial intelligence startup that rents out chips to other companies, announced Friday that it has a new $650 million credit line to expand its business and data center portfolio.
The cloud infrastructure company said it’s raised $12.7 billion from equity and debt investors in the past 18 months, including a $1.1 billion round in May at a $19 billion valuation.
By the end of 2024, CoreWeave plans to have 28 data centers across the U.S. and abroad — including locations in Austin, Texas, Chicago, Las Vegas and London — and it plans to build another 10 data centers in 2025. In the past, CoreWeave has supplied Microsoft and French AI startup Mistral with graphics processing units, or GPUs.
As of last year, CoreWeave reportedly had $2 billion in revenue under contract lined up for 2024.
AI models are notoriously expensive to build and train, requiring thousands of specialized chips that, to date, have largely come from Nvidia. Most, if not all, tech companies that are power players in AI spend between hundreds of thousands and billions of dollars on Nvidia chips to make their models work. And in addition to developing the chips, Nvidia has taken stakes in emerging AI companies like CoreWeave, partly as a way to make sure its technology gets widely deployed.
Goldman Sachs, JPMorgan Chase and Morgan Stanley led the financing CoreWeave announced Friday, with participation from Barclays, Citi, Deutsche Bank, Jefferies, Mizuho, MUFG and Wells Fargo.
“This credit facility provides additional liquidity to accelerate our growth strategy and capitalize on new opportunities in the rapidly evolving AI space,” Mike Intrator, CoreWeave’s co-founder and CEO, said in a press release.
CoreWeave’s new credit line is part of a broader trend, as banks are positioning themselves for a slice of the AI gold rush ahead of a number of potential IPOs in the space. The generative AI market is poised to top $1 trillion in revenue by 2032, according to one estimate.
Last week, OpenAI received a $4 billion revolving line of credit, bringing its total liquidity to more than $10 billion. The news came just after OpenAI closed its latest funding round at a $157 billion valuation.
Many of the same banks contributed to OpenAI’s credit line. The startup has an option to increase it by an additional $2 billion.
CoreWeave declined to provide details about the interest rate it’s paying or the timeframe for the credit facility.
Style-photography | Istock | Getty Images
Generative artificial intelligence startups are getting 40% of all the venture capital funding that flows into cloud companies, according to venture investors Accel.
In its latest annual Euroscape report, which looks at key cloud and AI trends, Accel said that venture funding for cloud startups based in the U.S., Europe and Israel is projected to rise to $79.2 billion this year, with artificial intelligence fueling much of the recovery.
Venture funding into the cloud industry climbed 27% annually — marking the first year of growth in three years. Cloud startups raised $62.5 billion in Europe, Israel and the U.S. in 2023, the report found.
Funding is up 65% from the $47.9 billion cloud firms raised four years ago, according to Accel.
It comes after OpenAI, the Microsoft-backed company behind the buzzy generative AI chatbot ChatGPT, earlier this month raised $6.6 billion in a mammoth funding round that valued the startup at $157 billion.
AI is eating software
Much of the growth of funding in cloud is being driven by excitement around AI.
“AI is sucking the air out of the room” when it comes to cloud, Philippe Botteri, partner at Accel, told CNBC in an interview this week. “This is both visible on the public market and and the private market.”
As of Sep. 30, the Euroscape index — a selection of publicly-listed U.S., European and Israeli cloud firms curated by Accel — is up 19% year-over-year.
This pales in comparison with the 38% increase the Nasdaq saw this year and is also down 39% from the Euroscape index’s peak hit back in 2021.
The cloud industry has been having a tough time beyond AI, with enterprise software budgets squeezed by macroeconomic and geopolitical risks.
“There’s a lot of uncertainty out there,” Botteri said, adding that businesses are increasingly asking questions around geopolitical tensions and macroeconomic factors, which have affected software spending priorities.
Not a single company in Accel’s Euroscape index has seen revenue growth of more than 40% per year this year, compared with 23 businesses achieving the feat in 2021.
“IT budgets are shifting towards AI,” Botteri noted. “They are still growing slightly, but they are growing a few percent year-over-year.”
“Part of it is budgets going toward genAI, building new applications, testing these new technologies, so there is less for the rest,” the VC investor added.
Foundational models in focus
The top six generative AI companies in the U.S., Europe and Israel, respectively, accounted for roughly two thirds of the funding raised by all genAI startups, according to Accel’s Euroscape report.
OpenAI raised a dominant $18.9 billion in 2023-24, taking the lion’s share of VC funding that went to U.S. genAI companies.
“When you look OpenAI and the speed at which the road to over $3 billion in revenues, this has been one of the fastest companies in software of all time,” said Botteri.
Anthropic raised the second-largest sum among U.S. genAI startups, with $7.8 billion, while Elon Musk’s xAI came in third.
In Europe, the biggest funding amounts went to Britain’s Wayve, France’s Mistral and Germany’s Aleph Alpha.
Globally, companies building so-called foundational models, which power much of today’s generative AI tools, account for two thirds of overall funding for generative AI firms, Accel said.
Big Tech’s AI splurge
The U.S. took the lead globally in terms of overall regional generative AI investment raised.
Out of the $56 billion total siphoned into genAI firms globally over 2023-24, roughly 80% of the cash went to U.S.-based firms, Accel said, also noting that Amazon, Microsoft, Google and Meta are each investing an eye-watering average $30 billion to $60 billion in AI per year.
AI “majors” like OpenAI, Anthropic and xAI are spending billions on the technology, Accel said, while smaller challengers including Cohere, H and Mistral are investing tens to hundreds of millions per year.
Dev Ittycheria, CEO of database firm MongoDB, noted that it’s likely concentration of the most powerful AI models will consolidate to only a select few players that are able to attract the necessary capital to make investments in data centers and chips to train and run their systems.
“Access to capital will profoundly impact the performance of these models,” Ittycheria said in an interview Tuesday on CNBC’s “Squawk Box.” He added: “My bet is that over time, you won’t have this many model providers, you may come down to one or two.”
An icon of ASML is displayed on a smartphone, with an ASML chip visible in the background.
Nurphoto | Nurphoto | Getty Images
Shares in semiconductor equipment maker ASML fell 15.6% on Tuesday after the Dutch company published disappointing sales forecasts in results a day early.
The move pulled other chip stocks lower, with Nvidia, Advanced Micro Devices and Broadcom all falling at least 4% after the news.
ASML said it expects net sales for 2025 to come in between 30 billion euros and 35 billion euros ($32.7 billion and $38.1 billion), at the lower half of the range it had previously provided.
Net bookings for the September quarter were 2.6 billion euros ($2.83 billion), the company said — well below the 5.6 billion euro LSEG consensus estimate. Net sales, however, beat expectations coming in at 7.5 billion euros.
“While there continue to be strong developments and upside potential in AI, other market segments are taking longer to recover. It now appears the recovery is more gradual than previously expected,” company CEO Christophe Fouquet said in the earnings release.
AMSL
ASML said that the early publication of its results was due to a technical error which saw it erroneously publish the report on a part of its website.
In the lead-up to the earnings, Wall Street analysts had turned more cautious on the chip firm, which is a critical supplier to the broader semiconductor industry.
China concerns
The firm is facing a tougher business outlook in China due to U.S. and Dutch export restrictions on shipments to the country.
Last month, the U.S. government rolled out new export controls on critical technologies to China, including advanced chipmaking tools. Separately, the Dutch government announced plans to take over control of exports of ASML‘s machines to the country.
ASML’s extreme ultraviolet lithography machines are used by many of the world’s largest chipmakers — from Nvidia to Taiwan Semiconductor Manufacturing Co. — to produce advanced chips.
The company’s chief financial officer, Roger Dassen, said Tuesday that he expects the firm’s China business to show a “more normalized percentage in our order book and also in our business.”
“We do see China trending towards more historically normal percentages in our business,” Dassen said, according to a transcript of a video, also released a day early.
“So we expect China to come in at around 20% of our total revenue for next year. Which would also be in line with its representation in our backlog.”
In its June-quarter earnings presentation, the Dutch company said that 49% of its sales come from China.
‘Clearly disappointing’
In a note released following ASML’s results Tuesday, analysts at Bernstein said the firm’s weaker-than-expected order book and a disappointing 2025 outlook were “likely to overshadow decent Q3 results.”
The analysts added that ASML’s lowered guidance indicates that “the delayed cyclical recovery and specific customer challenges are weighing heavily” on 2025 expectations.
Analysts at Cantor, meanwhile, said the downbeat outlook for ASML was “clearly disappointing” and will weigh on semiconductor stocks. However, they added that, “in no way shape or form does the company’s updated outlook indicate any change in the AI growth story.”
-
Sports2 years ago‘Storybook stuff’: Inside the night Bryce Harper sent the Phillies to the World Series
-
Sports6 months agoStory injured on diving stop, exits Red Sox game
-
Sports2 years agoMLB Rank 2023: Ranking baseball’s top 100 players
-
Sports12 months agoGame 1 of WS least-watched in recorded history
-
Environment1 year agoJapan and South Korea have a lot at stake in a free and open South China Sea
-
Sports3 years ago
Team Europe easily wins 4th straight Laver Cup
-
Environment2 years agoGame-changing Lectric XPedition launched as affordable electric cargo bike
-
Business2 years agoBank of England’s extraordinary response to government policy is almost unthinkable | Ed Conway