By Zaheer Kachwala (Reuters) -CoreWeave said it has signed a $14 billion agreement with Meta to supply computing power, the latest multi-billion-dollar deal as businesses ramp up infrastructure to meet the demand for artificial intelligence applications. Shares of CoreWeave surged 15% following the news on Tuesday. Under the agreement, Meta has committed to pay around […]
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CoreWeave signs $14 billion AI infrastructure deal with Meta
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By Zaheer Kachwala
(Reuters) -CoreWeave said it has signed a $14 billion agreement with Meta to supply computing power, the latest multi-billion-dollar deal as businesses ramp up infrastructure to meet the demand for artificial intelligence applications.
Shares of CoreWeave surged 15% following the news on Tuesday.
Under the agreement, Meta has committed to pay around $14.2 billion through December 14, 2031, with the option to expand through 2032 for additional cloud computing capacity, CoreWeave said in a filing.
AI technology developers are rushing to sign multi-billion-dollar deals to lock in infrastructure quickly, boosting valuations of backend service providers such as CoreWeave, which was valued at $60 billion as of last close.
The boom has also raised questions about “circular” financing, as many AI tech firms invest in and sign supply deals with each other. This has also sparked worries about whether the surge in valuation is a bubble.
“Nvidia’s chips are in CoreWeave’s data centers, which will then be used by companies like Meta. These kinds of deals spark bubble concerns because of how insular the industry appears, and the massive dollar amounts involved,” Emarketer analyst Jacob Bourne said.
At the same time, the AI market is expanding beyond the Magnificent Seven, which reduces the risk of a sudden bubble burst, he added.
The deal with Meta would also allow CoreWeave to fill data center capacity beyond its largest customer, Microsoft. Last week, the server provider signed a third multi-billion dollar cloud expansion deal with OpenAI.
As a part of the agreement, CoreWeave will provide the Facebook-parent access to Nvidia’s latest GB300 systems, according to a Bloomberg News report, citing an interview with the data center operator’s CEO Michael Intrator.
For Meta, the deal underscores its ambition to improve the technology that powers its consumer products such as the recently launched smart glasses with Ray Ban.
The social media firm has invested tens of billions into data centers across the U.S. and is paying athlete-level salaries to hire top AI software engineers. The social media firm did not immediately respond to a Reuters request for comment.
(Reporting by Zaheer Kachwala in Bengaluru; Editing by Leroy Leo)