Nvidia Invests in CoreWeave After IPO
Source: finance.yahoo.com
Nvidia's Investment Strategy
Nvidia, known for its AI chips, invests in companies, often those in the AI sector or partners. One recent investment has seen promising growth since its IPO.
CoreWeave Investment
Nvidia had invested in CoreWeave before its IPO in March, owning about 5% of shares, according to CoreWeave's prospectus. CoreWeave runs data centers for AI applications, purchasing GPUs from Nvidia and renting out data center services. Nvidia is also a CoreWeave customer. CoreWeave's CEO described the relationship as "symbiotic" on CNBC.
CoreWeave's Public Debut
CoreWeave's IPO was anticipated, targeting a $35 billion valuation. However, it launched at a $23 billion valuation, or $40 per share. Nvidia supported the IPO, increasing its shares from 17.9 million to 24.2 million, per an SEC filing.
Stock Performance
Despite the IPO, CoreWeave stock more than doubled, reaching $107. This included a 19% jump on Wednesday, potentially due to Citigroup raising its price target and Coreweave increasing its private offering of senior notes by $500 million to $2 billion total.
CoreWeave's Outlook
CoreWeave increased its revenue guidance for the year from $4.6 billion to $5 billion. The market reaction was muted due to an increased capital expenditures outlook. Concerns include 62% of its 2024 revenue coming from Microsoft and the company not being profitable yet.
One analyst is currently neutral on the stock, citing the company's business and ties to Nvidia as positives, but suggesting the valuation may need time to adjust after a rally.