Nandini Roy Choudhury, writer
Brief news
- CoreWeave secured a $650 million credit line to expand its AI business and data center portfolio, following $12.7 billion raised in 18 months.
- The company plans to establish 28 data centers by 2024, with additional centers in 2025.
- Major banks are investing in AI, anticipating significant market growth, as seen with CoreWeave and OpenAI’s recent funding successes.
Detailed news
CoreWeave, an artificial intelligence startup that licenses chips to other companies and is funded by Nvidia, announced on Friday that it has secured a new $650 million credit line to expand its business and data center portfolio.
In the past 18 months, the cloud infrastructure company has raised $12.7 billion from equity and debt investors, including a $1.1 billion round in May at a $19 billion valuation.
CoreWeave intends to establish 28 data centers in the United States and overseas by the conclusion of 2024. These centers will be situated in Austin, Texas, Chicago, Las Vegas, and London. Additionally, the company intends to construct an additional 10 data centers in 2025. CoreWeave has previously provided graphics processing units (GPUs) to Microsoft and the French AI startup Mistral.
CoreWeave was reported to have secured $2 billion in revenue under contract for 2024 as of the previous year.
The construction and training of AI models are notoriously costly, necessitating thousands of specialized processors that, to date, have been primarily purchased from Nvidia. The majority, if not all, of the technology companies that are major participants in AI invest between hundreds of thousands and billions of dollars in Nvidia processors to ensure the functionality of their models. In addition to the development of the chips, Nvidia has acquired stakes in emergent AI companies such as CoreWeave, in part to ensure that its technology is extensively deployed.
The financing for CoreWeave, which was announced on Friday, was led by Goldman Sachs, JPMorgan Chase, and Morgan Stanley. Barclays, Citi, Deutsche Bank, Jefferies, Mizuho, MUFG, and Wells Fargo also participated.
In a press release, Mike Intrator, CoreWeave’s co-founder and CEO, stated, “This credit facility provides additional liquidity to accelerate our growth strategy and capitalize on new opportunities in the rapidly evolving AI space.”
CoreWeave’s new credit line is indicative of a more general trend, in which banks are preparing to participate in the AI gold rush in advance of several prospective IPOs in the sector. One estimate indicates that the generative AI market is on the brink of surpassing $1 trillion in revenue by 2032.
OpenAI’s total liquidity exceeded $10 billion as a result of the $4 billion revolving line of credit it received last week. The announcement was issued shortly after OpenAI completed its most recent funding round at a valuation of $157 billion.
Many of the same institutions contributed to OpenAI’s credit line. The venture has the option to enhance its valuation by an additional $2 billion.
CoreWeave declined to disclose the interest rate or the duration of the credit facility.
Source : CNBC News
