With industries being reshaped by the AI revolution, CoreWeave finds itself at the peak of this transformation. CoreWeave, the Nvidia-backed AI infrastructure company, is gearing up for a very successful debut on Nasdaq. It expects its shares to open nearly 18% higher than the IPO price of $40. This would put the fully diluted valuation at about $27.4 billion, marking a remarkable achievement, even after the IPO was downscaled last Thursday.

A Test of the IPO Market

For other companies watching public listings while keeping a tab on how the economy goes with upcoming tariff-induced market disruptions, a strong opening might reflect a positive turn in mood. The stock is indicated to open at $47, an important test for the overall U.S IPO market.

Samuel Kerr, Head of Equity Capital Markets at Mergermarket, said,

“The U.S IPO market is at an inflection point. This next batch of deals will determine whether the U.S IPO momentum continues through the second quarter, or whether issuers decide the risk now isn’t worth it.”

Challenges despite AI Hype

The buzz around AI may be high now, but there are growing concerns regarding the future of AI valuations. CoreWeave becomes an interesting case in making a public offering that provides access to data centers and high-powered Nvidia chips crucial for AI development. However, analysts warn about the risks that heavy dependence on key customers, which was 73% of its revenue last year, was attributed to only two clients, including Microsoft. This may contain long-run risks.

However, on the investor roadshow, concerns were raised on CoreWeave’s dependence on Microsoft, whose evolving AI data center strategy could affect future demand. Kamran Ansari, Managing Partner at Kapital Ventures, said,

“I don’t know how receptive the market’s going to be.”

Further, the capital-intensive model has led to much debate over long-term sustainability, with last year’s balance sheet showing the company with an indebtedness of about $8 billion and an IPO with plans to divert about $1 billion of proceeds to reduce the debt.

CoreWeave Journey & a High-Stakes Model

Founded in 2017 with a focus on Ethereum mining, CoreWeave shifted to AI after Ethereum’s upgrade in 2022, “The Merge,” which reduced mining rewards. This resulted in winning a $11.9 billion deal with OpenAI ahead of the IPO to further cement the company’s position in the AI market.

CoreWeave’s leasing strategy of its 32 data centers and equipment creates an operational liability in itself, as the present liabilities stand at $2.6 billion. Though they do have strong free cash flow, analysts remain concerned about CoreWeave’s ability to honor its financial commitments in the long term.

Likewise, investors have shown skepticism towards unprofitable startups, and CoreWeave is no exception. Rapidly increasing revenue by more than eight times last year, the company has not yet proved its long-term viability.

Market Acceptance & Future Outlook

CoreWeave has settled investor interest but experts warn, it probably needs more than positive sentiment to prosper in the public markets. Anthony Georgiades, Founder and General Partner at Innovating Capital said,

“For most venture-backed deep tech startups, it’s going to take more than hype to make it through the public markets right now.”

CoreWeave’s stock will trade under the symbol “CRWV.” The IPO is being managed by a consortium of 18 banks, including Morgan Stanley, J.P. Morgan, and Goldman Sachs. As the company starts its public market journey, attention will turn to its ability to sustain growth and operate within an unpredictable AI environment.

The IPO of CoreWeave, which involved AI infrastructure and the entire tech sector, is much more than a market debut; it is an indicator. Key partnerships and breathtaking growth have become bright; however, concerns arise about financial risks and dependency on a few key clients. In the volatile market, profitability and the long-term business plan would make or break CoreWeave’s high valuation.