How CoreWeave Turned a Crypto Crash into an AI Empire

“You adapt, evolve, compete, or die.” ~ Paul Tudor Jones

CoreWeave: Right Place at the Right Time

Founded by three former commodities traders in New Jersey in 2017, ‘Atlantic Crypto’ first opened up shop as a crypto mining company, leveraging its graphic processing units (GPUs) to earn crypto rewards. At the time, crypto was becoming mainstream, Bitcoin was on its way to ~20x gains in two years, and business was good. However, in 2018, fate intervened when the crypto markets crashed and Bitcoin fell 80% from its peak.

“It’s not about the cards you’re dealt, but how you play the hand.” ~ Randy Pausch

CoreWeave Pivots from Crypto Mining to AI

While it didn’t seem like it at the time, the crypto crash would ultimately prove to be the best possible outcome for the company. Instead of fighting a brutal crypto bear market, the Atlantic Crypto team pivoted, sensing the incoming AI revolution. In 2019, the company renamed itself CoreWeave (CRWV). What happened next was an incredible stroke of luck, coupled with foresight.

CoreWeave had exactly the necessary ingredients to pivot into an AI juggernaut, including multiple data centers and the hard-to-attain and highly coveted Nvidia (NVDA) H100 chips. Between a unique arrangement with Nvidia and its existing data center infrastructure, CoreWeave began providing cloud computing infrastructure necessary to train large language models (LLMs) to big tech companie,s just as the AI race heated up and billions in CAPEX would be spent. Meanwhile, as an early mover, CoreWeave has optimized its platform to meet specialized AI needs, offering industry-best performance at a fraction of the price.

CoreWeave: Deals, Deals, Deals

CoreWeave’s business is accelerating at a lightning-fast rate. Over the past few weeks, CoreWeave has landed three multi-billion-dollar deals, including:

·       A $6.5 billion deal expansion with OpenAI to provide cloud infrastructure.

·       A $6.5 billion “backstop” deal with Nvidia. In the deal, Nvidia will purchase any of CoreWeave’s unsold cloud capacity through 2032.

·       A $14.2 billion deal to provide Meta Platforms (META) access to its Nvidia GB300 server racks and “Blackwell” GPUs.

When put into context, the approximately $27 billion in long-term deals is staggering, considering that CRWV’s market cap is only $67 billion.

CoreWeave Soars After Meta Deal

Tuesday, CoreWeave shares soared more than 10%, while intraday volume was on pace for the highest in the recent IPO’s young history. The heavy demand is a sign of heavy institutional accumulation as shares emerge from a double-bottom base structure.

Bottom Line

With billions in new, long-term deals from tech giants like OpenAI and Meta, CoreWeave has validated its strategy of being an optimized, dedicated player in a market hungry for compute power.

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This article originally published on Zacks Investment Research (zacks.com).

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