Who Stands to Gain More from the $6.3 Billion CoreWeave-Nvidia Deal? - A Question for Financial Investors
In a significant move to address the growing demand for AI computing power, Nvidia has chosen to invest in CoreWeave, an artificial intelligence (AI) based cloud computing company. This investment, worth billions, is aimed at tapping into CoreWeave's residual capacity, a move that comes as existing hyperscaler capacities struggle to meet the demands of major players like OpenAI.
The agreement between Nvidia and CoreWeave not only strengthens their investment and relationship but also enables both parties to scale their AI cloud infrastructure aggressively and expand into new markets. This deal is expected to provide CoreWeave with an additional revenue source and solidify its financial position, allowing it to meet its capital expenditure (capex) spending goals of between $20 billion and $23 billion in 2025 alone.
CoreWeave, known for renting out the GPUs it purchases to clients, specialises in building servers specifically for workloads related to AI, machine learning, high-performance computing, and visual effects. This deal offers a considerable boost to CoreWeave's top line, making it more likely that its massive spending will ultimately deliver positive returns.
For Nvidia, this deal offers several advantages. It allows the tech giant to rely less on large cloud providers like Amazon and Microsoft, giving it more control over its destiny. Moreover, the deal obligates Nvidia to purchase CoreWeave's residual unsold capacity until April 13, 2032, ensuring a claim over a scarce commodity in the intensely competitive AI market.
From an investor perspective, CoreWeave is likely to derive more benefit from the deal. While the company's market cap of $61 billion is significantly smaller than Nvidia's $4.25 trillion, its much smaller size allows it to attain higher percentage growth from a smaller base. The doubling of its value, for instance, would take its market cap to $116 billion, a significant leap.
However, it's important to note that CoreWeave comes with higher risks than Nvidia. Despite reporting a revenue of $2.2 billion in the first half of 2025, growing by 275% yearly, CoreWeave still lost $605 million during that time. This highlights the challenges and risks associated with the rapid growth and expansion that the company is pursuing.
Nevertheless, the potential for higher-percentage returns remains, making CoreWeave an attractive prospect for investors. Nvidia, for its part, has secured an order from CoreWeave worth at least $6.3 billion, a testament to the faith both parties have in each other and in the potential of the AI market.
In conclusion, the partnership between Nvidia and CoreWeave represents a strategic move by both companies to capitalise on the growing demand for AI computing power. As the AI market continues to evolve, we can expect to see more such collaborations that aim to meet the needs of a rapidly changing technological landscape.
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