MW How Nvidia saw $200 million evaporate after CoreWeave's IPO pricing

By Tomi Kilgore and Emily Bary

CoreWeave priced its IPO far lower than it originally expected, in a disappointing development for Nvidia

It's safe to say the pricing of the CoreWeave Inc. initial public offering was a big disappointment for Nvidia Corp. - to the tune of about $200 million.

Nvidia $(NVDA)$ owns 17,932,460 Class A shares of CoreWeave $(CRWV)$, representing 3.8% of the total shares outstanding. At the IPO price of $40 a share, Nvidia's stake would be valued at $717.3 million.

Just a week before the pricing, CoreWeave had said it expected the IPO to price between $47 and $55 per share. At the midpoint of that range, Nvidia's stake would have been valued at $914.6 million, and at the top of the range, it would have been valued at as much as $986.3 million.

The disappointing pricing comes as concerns over the economic outlook in the face of budding trade wars and persistent inflation have kept many investors on the sidelines.

The Renaissance IPO exchange-traded fund IPO slumped 1.9% in morning trading Friday. It has shed 3% so far this week, while the S&P 500 index SPX has declined 0.7%.

Nvidia's stock was down 1.5% Friday and has dropped 6.7% this week.

Nvidia's stake in CoreWeave is subject to a "lock-up" agreement, meaning Nvidia is unable to sell any of its shares for at least 180 days after the IPO.

Don't miss: What is CoreWeave, the cloud-services provider that's going public

CoreWeave runs a network of data centers and is a significant Nvidia customer, accounting for perhaps 6% to 7% of Nvidia's revenue, according to estimates from D.A. Davidson analyst Gil Luria.

The CoreWeave IPO is a way for Nvidia "to leverage a small investment into a very large customer," he added.

An Nvidia spokesperson declined to comment on a MarketWatch request for comment about the CoreWeave investment.

Microsoft Corp. $(MSFT)$, which is CoreWeave's largest customer, doesn't own shares of the company, based on the prospectus.

CoreWeave and Nvidia are partners, with CoreWeave noting in its prospectus that "all of the GPUs used in our infrastructure today are Nvidia GPUs," or graphics processing units. CoreWeave had 250,000 GPUs deployed as of the end of 2024, and the company called that "one of the world's largest next-generation GPU fleets."

According to CoreWeave, the partnership between it and Nvidia is "mutually beneficial." While CoreWeave buys Nvidia GPUs, the company said its proprietary software improves GPU performance and helps "get their technology in the hands of end customers faster."

Read: The blogger who was right about Nvidia is now panning the CoreWeave IPO

D.A. Davidson's Luria has some concerns about the arrangement, saying that it suggests "more risk than we previously realized" for Nvidia.

"It appears Nvidia has allocated more than 10% of its supply" to neocloud companies including CoreWeave "that would have otherwise not existed, and would not exist without significant high-interest-rate debt."

CoreWeave said in its prospectus that it maintains "a sophisticated financing strategy" that allows it to obtain more compute capacity through asset-backed debt. Through the end of last year, the company had raised $12.9 billion in total debt commitments "to support the development of our platform."

Bill Smith, the chief executive of Renaissance Capital, wrote that it was "rare to see a tech IPO call itself a pioneer in debt financing."

-Tomi Kilgore -Emily Bary

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March 28, 2025 10:36 ET (14:36 GMT)

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