This Nvidia-Backed AI Start-Up Just Filed for an IPO. Should You Buy The Stock?

3 weeks ago 7

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Brett Schafer, The Motley Fool

Sun, Mar 16, 2025, 7:30 AM 5 min read

The archetypal nationalist offering (IPO) marketplace has been ice-cold since 2021. In 2020 and 2021, we saw a deluge of companies entering the nationalist markets, particularly via a roar successful peculiar intent acquisition companies (SPACs). Many of these ended up being poorly tally businesses, and immoderate were adjacent frauds. Ever since then, determination has been a specified trickle of caller banal listings, arsenic start-ups decided to stay private.

Could artificial quality (AI) beryllium waking the IPO marketplace up? Last week, AI unreality start-up CoreWeave filed its authoritative fiscal statements successful mentation for an IPO and banal listing. This is possibly the archetypal generative AI banal to deed the nationalist markets. The institution is backed by Nvidia (NASDAQ: NVDA) and volition beryllium followed closely.

Let's instrumentality a deeper look astatine the CoreWeave concern and spot whether investors should buy shares of this IPO.

Originally, CoreWeave was a cryptocurrency mining operation. Crypto mining requires a batch of computing power, which led the institution to get a ton of graphics processing units (GPUs) from Nvidia. This led to a fortuitous concern exemplary pivot. In precocious 2022, the cryptocurrency markets were plunging. At the aforesaid time, generative AI products were gaining traction owed to the rising popularity of Chat GPT, which inspired CoreWeave to flip from being a cryptocurrency miner to being an AI unreality supplier utilizing its Nvidia GPUs. In 2023, Nvidia invested $100 cardinal successful the company.

Generative AI tools -- astatine slightest however they are presently constructed -- necessitate tons of computing powerfulness to train, operate, and scale. This is wherefore large exertion companies are readying to walk hundreds of billions connected superior expenditures successful 2025. There is simply a seemingly insatiable request for unreality computing resources, which has customers lining up astatine the doorway urgently looking to walk wealth with these hyperscalers that supply it.

CoreWeave has present positioned itself arsenic an AI-focused unreality hyperscaler, trying to vie with the likes of Amazon Web Services, Microsoft Azure, and Alphabet's Google Cloud. So far, this focused unreality strategy seems to beryllium moving retired well. In 2022, CoreWeave generated conscionable $15.8 cardinal successful revenue. In 2024, gross soared to $1.9 billion, making it 1 of the fastest-growing businesses successful the world. It is besides already profitable, generating $324 cardinal successful operating income past year, conscionable a fewer years aft making its merchandise pivot.

CoreWeave is apt to rise billions of dollars from this IPO, successful which it volition merchantability shares to the public. It has applied to database its Class A communal banal connected the Nasdaq Stock Market with the awesome CRWV.