"AI Computing Power Benchmark" CoreWeave significantly lowers valuation ahead of IPO, cutting financing scale by nearly half

Just as the outside world observes whether the heat of the AI sector has peaked, AI infrastructure star company CoreWeave has suddenly significantly lowered its IPO valuation.

On Thursday Eastern Time, Reuters cited informed sources reporting that CoreWeave has reduced its IPO offering price to $40, far below the previous range of $47 to $55.

At the same time, the number of shares issued has been reduced from the originally planned 49 million shares to 37.5 million shares. The overall fundraising amount has shrunk from the planned $2.7 billion to $1.5 billion, and the valuation has dropped from a peak of $32 billion to about $23 billion, nearly cutting one-third off. The company is expected to price the IPO later on Thursday.

Media company Semafor commented: "CoreWeave's listing is not only about its own fate but is also seen as an important indicator of whether the entire IPO market can thaw."

The Problems Beneath the Glamorous Surface: Cash Burn, Losses, Heavy Debt

CoreWeave plans to list on NASDAQ under the code "CRWV," with underwriters including Morgan Stanley, JP Morgan, Goldman Sachs, and other top investment banks.

As an AI cloud service company incubated by NVIDIA and deeply tied to giants like Microsoft, CoreWeave was originally highly anticipated, not only providing high-performance GPU computing power support but also signing a $11.9 billion deal with OpenAI earlier this month, and even planning to privately place $350 million in shares to it.

The company focuses on providing high-performance GPU-accelerated infrastructure, primarily for compute-intensive tasks such as artificial intelligence and machine learning. It has rapidly expanded its data center network in the U.S. and Europe, offering customized AI cloud services to clients.

In other words, CoreWeave is at the core of what is being called the "capital expenditure wave." However, this IPO has not ignited market sentiment as expected, but rather exposed the financing difficulties of AI concept stocks under high valuations.

CoreWeave's business model is highly dependent on capital support. In 2024, the company burned nearly $6 billion in cash, and the previous year it was as high as $1.1 billion. Meanwhile, its debt level continues to rise, with approximately $8 billion in on-balance-sheet debt as of last year, plus $2.6 billion in operating lease liabilities, as its 32 data centers and some equipment are leased.

The company clearly stated in its prospectus that $1 billion of the funds raised from the IPO will be used to repay debt, and it will continue to incur debt in the future.

What worries the market even more is that CoreWeave has yet to turn a profit. In recent years, the IPO market has become cautious towards companies with no profit history. High debt, high capital expenditure, and unclear profit paths have led many institutions to discount its valuation.

The "Canary" of the AI Bubble?

Some analysts point out that CoreWeave may be the "canary" in the AI bubble. Commentators who have compared CoreWeave to WeWork noted that its growth comes from large-scale cash-burning expansion, with the return cycle yet to be verified, relying instead on continuous financing to maintain operations.

It is worth noting that CoreWeave's largest client is Microsoft, and the company has recently been rumored to be involved in a "revenue roundtripping" structure involving Microsoft, NVIDIA, and OpenAI This type of arrangement with clients that has a high degree of overlap with capital structure has raised more doubts in the market about the company's true income structure and sustainability.

Just a few days before Cowen released its report, the market heard that CoreWeave was eager to complete its IPO, possibly related to the termination of a $12 billion computing power options contract with Microsoft. Semafor reported that this option was initially signed by Microsoft with CoreWeave but was later abandoned, and the computing resources were quickly taken over by OpenAI. Most of OpenAI's funding comes from Microsoft itself.

At the same time, competitors like DeepSeek have emerged in China, intensifying concerns about a global computing power investment bubble and price wars.

As of now, NVIDIA's stock price has reacted mildly to this news.