CoreWeave Stock Is Rising on $6.3 Billion Deal With Nvidia. What to Know.

Nvidia is obligated to purchase CoreWeave’s unsold cloud-computing capacity through April 13, 2032. (Yuki Iwamura/Bloomberg)

Key Points

About This Summary

• CoreWeave rises after it revealed a $6.3 billion cloud-computing deal with Nvidia.
• Nvidia will buy unsold cloud capacity through April 2032 if CoreWeave’s data centers aren’t fully utilized.
• The deal may ease Wall Street concerns about CoreWeave’s business model, which relies on data center spending.

Shares of CoreWeave were rising Monday after the cloud-service provider revealed it has a $6.3 billion cloud-computing deal with Nvidia .

As part of the agreement, Nvidia is obligated to purchase any unsold cloud-computing capacity through April 13, 2032, if CoreWeave’s data centers aren’t fully utilized by its own customers. Nvidia also supplies graphics processing units, or GPUs, to CoreWeave and owns around 6.6% of the cloud provider’s stock as of June 30.

The previously undisclosed deal dates back to April 10, 2023, CoreWeave said in a Securities and Exchange Commission filing. Management deemed it a material agreement, which requires disclosure, after the two companies entered into a new order form last Tuesday.

“The agreement reflects the scale, trust, and pivotal role CoreWeave plays in accelerating AI innovation worldwide,” a company spokesperson said in a statement.

CoreWeave shares were rising 6.2% to $118.90 on Monday. Nvidia stock was down 0.2% after China’s market regulator said a preliminary investigation concluded the chip maker violated antimonopoly laws.

The agreement may quell some of Wall Street’s concerns about CoreWeave’s business model, which relies on capital expenditures to build and equip data centers. This year alone, the company forecast capital expenditures of $20 billion to $23 billion. The heavy upfront spending means plenty of debt, which heightens the potential downsides of unused computing capacity down the line.

CoreWeave often has defended these capital expenditures as “success-based,” downplaying the risk of adding debt to its balance sheet.

“We’re not buying infrastructure and hoping that people come and use it,” Brannin McBee, co-founder and chief development officer, told Barron’s earlier this year.

The company will file the full terms of the agreement with Nvidia alongside its next quarterly report. That filing is expected Nov. 12.

Write to Nate Wolf at nate.wolf@barrons.com