By Asa Fitch and Laura Cooper
CoreWeave, an artificial-intelligence cloud-computing startup backed by Nvidia, has raised $7.5 billion from investors including Blackstone, Carlyle Group and BlackRock in one of the largest-ever private debt financings.
The new debt financing follows a $1.1 billion equity funding round two weeks ago that valued the fast-growing company at $19 billion. Last year CoreWeave did another debt financing deal worth $2.3 billion.
New Jersey-based CoreWeave sits near the red-hot center of the AI boom, leasing out access to AI chips from Nvidia that are essential to creating AI systems such as OpenAI's ChatGPT. The company operated in 14 data centers at the end of last year and plans to double its footprint to 28 data centers by the end of this year.
Much of the new funding will go toward that effort, including purchases of AI chips and associated infrastructure such as servers and networking equipment, Chief Executive Michael Intrator said.
"It is a monumental financing in nominal terms, but it's also a monumental financing in terms of the extent to which it drives the company forward," he said. He added that he expected the $7.5 billion to be committed this year, after which the company would be back for another facility.
The funding underlines strong investor interest in businesses exposed to the AI boom as well as the staying power of that boom more than a year after ChatGPT captured the public's imagination and led to a flood of investment in AI companies and in Nvidia.
CoreWeave is one of a number of AI cloud-computing companies that have sprung up in the past few years, offering customers early access to the most advanced AI chips and focusing on the AI computing niche. The biggest cloud-computing companies in the world -- Microsoft, Amazon.com and Alphabet's Google -- offer a wider range of services.
CoreWeave is in the same league as the largest cloud-computing players, referred to in the industry as hyperscalers, when it comes to AI computation, company co-founder Brannin McBee said.
"I don't think anyone would have expected another hyperscaler was going to come into the market this quickly," he said.
While there are few signs that AI is losing steam, companies building the infrastructure to carry it forward face growing challenges. There are mounting concerns about the availability of enough electricity to power a massive expansion of data centers filled with Nvidia's chips. And companies have yet to make revenue commensurate with the amount of spending on AI hardware in recent years.
CoreWeave has spent most of its seven years of existence as a U.S.-centric company. It recently expanded to London and said it would open two data centers in the U.K. this year, with more to come in 2025. The expansion reflects that a growing amount of AI work is centered on deploying AI tools rather than creating them -- a shift that necessitates a global footprint where data centers are closer to users of the services.
Nvidia participated in a funding round for CoreWeave last year, which Intrator said was a reflection of the company's ability to execute on its plans and get hardware set up for end customers quickly. Chips from Nvidia -- the dominant AI chip supplier, with a market share estimated at over 80% -- are critical to the success of CoreWeave, and it has been able to secure large allocations of them even in the midst of supply constraints.
The asset-management firm Blackstone led the debt financing, with participation from Magnetar Capital, which co-led; Coatue Management; Carlyle Group; CDPQ; DigitalBridge; BlackRock; Eldridge Industries and Great Elm Capital. Some of those investors have participated in CoreWeave's earlier equity and debt deals.
Write to Asa Fitch at asa.fitch@wsj.com and Laura Cooper at laura.cooper@wsj.com
(END) Dow Jones Newswires
May 17, 2024 13:15 ET (17:15 GMT)
Copyright (c) 2024 Dow Jones & Company, Inc.
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