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Microsoft has left CoreWeave withdrew next month, moving away from some of its commitments at cloud computing provider CoreWeave.
CoreWeave provides Microsoft with computing capacity from the data center. This is used by Tech Giant to scale up powerful AI models such as Openai’s ChatGPT. The partnership is worth billions of dollars for CoreWeave.
However, Microsoft has withdrawn from some of the delivery issues and contracts that missed deadlines, according to people with knowledge of the issue.
Those people refused to discuss specific details about abandoned services, but one of them said the issue would affect Microsoft’s confidence in CoreWeave. They added that Microsoft has held many ongoing contracts with CoreWeave, which has remained a key partner.
With Microsoft being its biggest customer, the change in relationships will be a huge hit for the New Jersey-based company. Earlier this week, CoreWeave applied for a New York IPO that was about to raise $4 billion, hoping to value the group at over $35 billion.
In submission of the IPO, CoreWeave warned that “negative changes in demand from Microsoft will affect our business, operating terms, future financial position and future financial position in the laws or regulations applicable to Microsoft or Microsoft or in the broader strategic relationship with Microsoft.”
Microsoft has agreed to spend more than $10 billion on CoreWeave services under five agreements between the two companies by 2030. According to public disclosures, the contract with Microsoft accounted for 62% of CoreWeave’s total revenue last year.
Previous cryptocurrency mining operations were CoreWeave, pivoted to provide cloud computing services for technology companies to build and train AI models using NVIDIA’s high-performance graphics processing units (GPUs).
The group has attracted over 250,000 people from Nvidia’s AI GPUs, making it one of the chip makers’ biggest customers. Nvidia is also an investor in CoreWeave and owns more than 5% of the company.
CoreWeave said it has a consistent track record of providing complex AI infrastructure at scale to some of the world’s leading AI labs and businesses. By doing so, we have been able to gain and maintain customer confidence. ”
Microsoft and Nvidia declined to comment.
As part of the IPO filing, CoreWeave pointed to the risk of “asymmetry” and “delay” in the supply chain associated with intensive exposure to Nvidia, which supplies all chips.
The company said it reduced supply chain costs and latency controls, including “recent delays related to Nvidia’s Blackwell GPUs.” In October, Nvidia chief Jensen Huang admitted that its new Blackwell chip had a “design flaw” and delayed shipping to customers.
The disclosure as part of the IPO process shows that CoreWeave has grown rapidly, accumulating a large amount of debt. In 2024, it generated revenue of $19 billion, up from $229 million the previous year and $16 million in 2022. However, the company recorded $863 million in 2024, $594 million in 2023 and $31 million in 2022.
CoreWeave raised $14.5 billion in debt and equity over 12 funding, including around $11 billion in loans. It has pioneered Wall Street asset support lending to technology companies with a large amount of AI chips.
The biggest investors are Blackstone, a private equity company that lends around $5 billion, Magnetor Capital, which owns about 20% of the company, and Fidelity, which manages funds that own around 8%.
CoreWeave was founded under the name Atlantic Crypto by commodity traders Mike Intrator, Brian Venturo and Brannin McBee to mine cryptocurrency Ethereum before pivoting to AI in 2019.
The three founders have each sold at least $150 million worth of shares in the company since December 2023, according to IPO submissions. CoreWeave’s 10 directors and executives (including three co-founders) collectively own around 30% of the company, but have more than 80% of the voting rights.
Industry observers say Microsoft’s data center strategy has shifted this year after completing its exclusive agreement with Openai on computing power leasing.
TD Cowen analysts last month said Microsoft had withdrawn from two data center lease agreements, citing an inquiry with supply chain providers.
In response to the Cowen report, Microsoft said its infrastructure spending plans are on track. However, Microsoft CEO Satya Nadella said in a recent interview that there was an “overbuild” of AI infrastructure.
The decision to use CoreWeave to leave any business is unrelated to the wider changes in their own data center plans, according to one of those close to the issue. In January, the company said it would spend around $800 billion in the fiscal year ending June 30th, and would train AI models to build the infrastructure needed to deploy applications.
On Wednesday, CoreWeave announced it had reached an agreement to win Biase with Weight, a launch of an AI developer platform worth $1.25 billion in 2023.
