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Investing.com -- CoreWeave shares dropped 6% Thursday following a report from The Verge that characterized the company as being at "the heart of the AI bubble," raising questions about its business model and dependence on Nvidia.
The tech publication previewed an upcoming investigative story that examines CoreWeave’s rapid transformation from an Ethereum mining operation to a major AI infrastructure provider now valued at nearly $50 billion. According to the report, the New Jersey-based company, founded by former commodities traders, pivoted from crypto mining to AI computing when cryptocurrency markets declined.
CoreWeave’s business model involves raising substantial capital to build data centers filled with Nvidia GPUs, which it then leases to major AI companies. The company has secured multi-billion dollar contracts with tech giants like Meta and OpenAI this year alone.
However, The Verge’s investigation suggests CoreWeave’s success story may be more complex than it appears, highlighting the company’s "creative financing" methods and what it describes as an unusually dependent relationship with Nvidia. The report indicates that CoreWeave "could not exist without extraordinary levels of financial investment from Nvidia" and questions the sustainability of its business model.
The company went public in March 2023 and has positioned itself as providing essential infrastructure for the AI industry’s computing needs. The full investigative report from The Verge is expected to be published next week, potentially providing more details about CoreWeave’s finances and business practices.