Microsoft withdraws some CoreWeave agreements ahead of US$35b IPO: FT
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The news: Microsoft is walking away from certain agreements it had made with cloud computing provider CoreWeave over delivery issues and missed deadlines, according to sources cited by the Financial Times.
The numbers: The New Jersey-based company filed for a New York initial public offering (IPO) earlier this week, seeking to raise USD4 billion ($6.3 billion) and is expected to value the group at over USD35 billion.
Under five contracts with CoreWeave, Microsoft had agreed to spend over USD10 billion with the company by 2030. Deals with Microsoft amounted to 62% of CoreWeave’s total 2024 revenues.
The context: CoreWeave provides Microsoft with computing capacity from data centres, which allows the tech player to scale up AI models including ChatGPT.
While it is unclear from which CoreWeave agreements Microsoft has withdrawn, sources told the FT that delivery issues and missed deadlines are to blame. The tech giant has retained a number of contracts and remains a key partner for CoreWeave, despite the issues impacting Microsoft’s confidence in the company. In its IPO filings, CoreWeave warned: “any negative changes in demand from Microsoft, in Microsoft’s ability or willingness to perform under its contracts with us, in laws or regulations applicable to Microsoft or the regions in which it operates, or in our broader strategic relationship with Microsoft would adversely affect our business, operating results, financial condition, and future prospects.”
CoreWeave is undergoing rapid growth, and is one of Nvidia’s largest customers having acquired over 250,000 of the company’s AI GPUs. However, CoreWeave said in its IPO filings that it is also vulnerable to potential delays in its supply chain given its large exposure to Nvidia.
The source: Financial Times
