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CoreWeave Gains Momentum as Nvidia Invests $2 Billion to Expand Data Center

Prime Highlights:

  • Nvidia invests $2 billion in CoreWeave to accelerate its data center growth.
  • CoreWeave’s shares rise nearly 6% following the announcement.

Key Facts:

  • CoreWeave plans to build 5 gigawatts of data center capacity, enough to power roughly 4 million U.S. households.
  • The company has major contracts with Meta ($14.2 billion) and OpenAI ($22.4 billion) to provide cloud infrastructure.

Background:

CoreWeave, a leading provider of cloud infrastructure, saw its stock rise nearly 6% on Monday after Nvidia announced a $2 billion investment to help expand its data center operations.

Nvidia purchased CoreWeave Class A common stock at $87.20 per share, a discount from the company’s closing price of $92.98 on Friday. The investment is intended to support CoreWeave’s ambitious plan to develop 5 gigawatts of data center capacity by 2030, a scale roughly equivalent to the annual electricity use of four million U.S. households.

“This deal allows us to accelerate our build and continue diversifying our operations, reducing dependency on any single client as we expand our data center capacity,” CoreWeave CEO Mike Intrator said.

CoreWeave primarily generates revenue by building and leasing data centers equipped with Nvidia’s graphics processing units, which are essential for running high-performance computing tasks. The company, often described as a “neocloud,” has quickly become a central player in the growing network of data center and infrastructure partners.

Prior to this investment, Nvidia was already a major supporter of CoreWeave. In September, CoreWeave disclosed an order from Nvidia valued at a minimum of $6.3 billion, which includes an agreement for Nvidia to purchase unsold capacity through April 2032.

In recent months, CoreWeave has also expanded contracts with other major tech companies. In September, the company signed a $14.2 billion deal to provide cloud infrastructure for Meta and expanded its contract with OpenAI to $22.4 billion. Despite these large deals, some investors are concerned about the company’s rising debt used to support rapid growth.

Nvidia CEO Jensen Huang said the company is just beginning to build the core technology systems, and the demand for them is very high. CoreWeave’s leadership believes that the data centers they are building now will form the backbone of computing operations for years to come.

With this new investment, CoreWeave can grow faster and strengthen its position as an important provider of technology infrastructure.