CoreWeave shares end lower as OpenAI deal fails to calm spending worries

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By Jaspreet Singh

(Reuters) – CoreWeave shares closed 2.5% lower on Thursday as the company’s expanded cloud deal worth up to $4 billion with OpenAI failed to assuage investor worries over its hefty annual spending plans.

The Nvidia-backed data center operator had on Wednesday said in its first earnings since going public in March it would spend about four times more than the predicted revenue in 2025.

Companies are investing billions of dollars into artificial intelligence even as investor scrutiny has sharpened after the launch of DeepSeek’s low-cost AI models.

On a post-earnings call, executives of CoreWeave said it had signed an expansion deal with an unnamed company. A day later CoreWeave said in a regulatory filing OpenAI has committed to pay it through April 2029.

OpenAI and CoreWeave already have a five-year contract worth $11.9 billion in place, under which the New Jersey-based firm provides the ChatGPT maker cloud computing capacity. The deal also gave OpenAI a stake in CoreWeave.

The company executives had also said CoreWeave had signed on a new hyperscaler as a client. The company declined to name the new client when contacted by Reuters.

Analysts at Morgan Stanley and MoffettNathanson said the client could be Google-parent Alphabet. A media report in April had said Google was in talks to rent Nvidia chips from CoreWeave.

“Hyperscalers are direct competitors to CoreWeave and are only temporarily using CoreWeave for overflow capacity. They will likely go away once they have built out enough of their own data centers,” D.A. Davidson & Co analyst Gil Luria said.

As of last close, CoreWeave’s stock has surged more than 64% from its offer price in March IPO. At least seven brokerages have raised their price targets to between $50 and $80.

(Reporting by Jaspreet Singh in Bengaluru and Juby Babu in Mexico City; Editing by Krishna Chandra Eluri and Arun Koyyur)