CoreWeave: AI Data Center Stock Winner?
Source: finance.yahoo.com
OpenAI's Shift to Google Cloud
OpenAI's reliance on Microsoft's Azure platform for computing power has been significant during the AI revolution. However, OpenAI has been exploring alternatives and recently partnered with Google. Although this collaboration benefits Google, a data center infrastructure service provider stands to gain even more.
CoreWeave: A Key Player
While companies like Nvidia, Palantir Technologies, and Tesla receive considerable attention in the AI sector, OpenAI, the company behind ChatGPT, remains a major force. OpenAI's recent partnership with Alphabet has implications for the AI landscape. Microsoft initially invested $10 billion in OpenAI, integrating ChatGPT into Azure. Now, OpenAI is diversifying by using Google Cloud Platform (GCP) alongside Azure.
Beyond the benefits for Alphabet's cloud business, CoreWeave (NASDAQ: CRWV) is emerging as a crucial resource. It offers cloud-based infrastructure services, allowing companies to rent GPUs without purchasing them directly from Nvidia and others. The increase in CoreWeave's remaining performance obligations suggests strong demand for these infrastructure services.
CoreWeave's Deals and Outlook
CoreWeave has secured an $11.2 billion deal with OpenAI. CoreWeave also supplies computing power to Alphabet, which is then resold to OpenAI as part of their cloud agreement. Infrastructure services are becoming increasingly important in AI. While OpenAI's deals continue to make headlines, CoreWeave may also benefit from these partnerships.
Wall Street's forecasts for CoreWeave are optimistic, anticipating rapid revenue growth and profitability. CoreWeave's close collaboration with OpenAI suggests increased scrutiny as more AI infrastructure deals emerge. Investors should monitor CoreWeave's performance against these expectations. Despite CoreWeave's potential, it is a relatively new public company, and its stock has seen significant gains. Investors may want to consider waiting for a pullback before investing.
The Motley Fool Stock Advisor team has identified other stocks that they believe are better investments than CoreWeave.