CoreWeave (CRWV), a cloud provider that specializes in AI (artificial intelligence) infrastructure, is reportedly set to power the recently announced cloud deal between tech giant Google (GOOGL) and ChatGPT-maker OpenAI. According to Reuters, CoreWeave will offer computing capacity to Google’s cloud unit, which, in turn, will sell it to OpenAI to address the growing demand for AI services like ChatGPT.
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In addition, sources told Reuters that Google will offer some of its own computing resources to OpenAI. Despite this news, shares of CoreWeave fell slightly in today’s trading.
CoreWeave Poised to Gain from AI Demand
The massive demand for computing power is changing the dynamics in the tech world and fueling deals between large cloud service providers, also known as hyperscalers, such as Google, Microsoft (MSFT), and Amazon (AMZN), and neocloud companies like CoreWeave.
CoreWeave, which provides customers access to Nvidia’s (NVDA) GPUs (graphics processing units), went public in March. Thanks to AI tailwinds, CRWV stock has rallied 191% over the past month. Notably, the company has secured a five-year contract worth $11.9 billion with OpenAI to provide computing capacity. Additionally, CoreWeave and OpenAI expanded their collaboration with an additional agreement of up to $4 billion, extending through April 2029, to meet the latter’s growing demand for high-performance computing resources.
The latest arrangement with Google’s cloud unit is expected to boost CoreWeave’s prospects while diversifying its revenues and addressing concerns about revenue concentration. For context, Microsoft (MSFT) accounted for 62% of CoreWeave’s revenue in 2024.
Is CRWV Stock a Buy?
With seven Buys and five Holds, Wall Street has a Moderate Buy consensus rating on CoreWeave stock. Furthermore, the average CRWV stock price target of $47.42 implies a downside risk of 68.2% from current levels.
While CoreWeave Bulls are upbeat about AI-led demand, other analysts are concerned about the stock’s lofty valuation.
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