Nvidia-backed CoreWeave to spend up to $23 billion this year to tap AI demand boom

By Arsheeya Bajwa and Zaheer Kachwala

(Reuters) -CoreWeave is looking to spend $20 billion to $23 billion this year on AI infrastructure and data center capacity, the Nvidia-backed company said on Wednesday, as it aims to meet booming demand from clients, including Microsoft.

The heavy-spending plan weighed on its shares, which fell 5% after surging as much as 11% on better-than-expected revenue in its first results as a public company after debuting on the Nasdaq in March.

CoreWeave has a unique way of structuring its debt and capital spending that will take time for the market to understand, CEO Mike Intrator told Reuters in an interview.

"You pay back your infrastructure fully loaded and you have significant profit," Intrator said.

The company's projected capital expenditure of between $3 billion and $3.5 billion for the second quarter was way above its revenue expectation of $1.06 billion to $1.1 billion.

The demand for data centers and high-powered servers have surged as businesses are locked in a race to develop more sophisticated generative AI technology.

In the wake of U.S.-China trade tensions, Itrator said CoreWeave was working to diversify its supply chains with the aim of minimizing the impact of tariffs.

"(Our clients) are looking for really significant investment from us, and we're trying to make sure that we're doing it in a way that doesn't in any way impact our ability to secure the margins that we need in order to run our business," he said.

Despite its strong market position, CoreWeave's main business is highly capital intensive that requires heavy upfront investments into advanced processors and systems.

"While the revenue from Microsoft is likely secure for the next three years, CoreWeave represents overflow capacity for Microsoft, which may not need that capacity in the future," D.A. Davidson analyst Gil Luria said.

The company's revenue backlog was $25.9 billion as of March 31, with its five-year deal with OpenAI adding $11.2 billion to the pile up.

As part of the deal signed in March, CoreWeave will provide AI infrastructure to OpenAI, while the ChatGPT maker will get a stake.

CoreWeave expects annual revenue of $4.9 billion to $5.1 billion, above analysts' expectation of $4.61 billion, according to data compiled by LSEG.

It reported revenue of $981.6 million for the first quarter, beating the estimate of $852.9 million.

(Reporting by Arsheeya Bajwa and Zaheer Kachwala in Bengaluru and additional reporting by Max A. Cherney in San Francisco; Editing by Shilpi Majumdar and Stephen Coates)

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