OpenAI Signs Massive Deal with CoreWeave, Potentially Weakening Ties with Microsoft
In a move that could reshape the landscape of AI infrastructure, OpenAI has signed a five-year, $11.9 billion deal with CoreWeave, a cloud service provider specializing in GPU computing. This agreement includes OpenAI acquiring $350 million in CoreWeave equity. This strategic partnership signifies a significant shift in the AI world and could indicate a strain in the relationship between OpenAI and its longtime supporter, Microsoft.
CoreWeave’s expertise lies in providing cloud services optimized for AI workloads. The company is backed by Nvidia, which holds a 6% stake. As of late 2024, CoreWeave had over 250,000 Nvidia GPUs, with recent additions including the cutting-edge Blackwell GPUs designed for AI processing.
Prior to the deal with OpenAI, CoreWeave’s largest customer was Microsoft. According to TechCrunch, Microsoft accounted for 62% of CoreWeave’s revenue in 2024, which grew to a staggering $1.9 billion – an almost eight-fold increase from $228.9 million in 2023.
The deal also comes as CoreWeave prepares for an initial public offering (IPO), potentially aiming to raise $4 billion or more. The substantial reliance on Microsoft raised concerns among potential investors. Securing such a large deal with OpenAI may help alleviate those concerns, easing worries about customer concentration.
Strained Relationship Between OpenAI and Microsoft
The deal between OpenAI and CoreWeave adds a new dimension to the evolving relationship between OpenAI and Microsoft. Microsoft, which has a profit-sharing agreement with OpenAI, was previously its sole cloud provider. However, as OpenAI’s ambitions have grown, tensions have surfaced in the increasingly competitive enterprise AI market.
OpenAI is reportedly developing expensive AI agents, while Microsoft is building its own AI models, including the MAI family, to rival OpenAI’s o1 and o3-mini offerings. Microsoft even tapped Mustafa Suleyman, a rival to OpenAI CEO Sam Altman, to lead its AI division.
This move isn’t the first indication of OpenAI diversifying its infrastructure. As part of the Stargate AI project with partners like SoftBank and Oracle, OpenAI ended Microsoft’s exclusivity as its cloud provider in January. Altman has been vocal about the company’s need for more computing power, recently stating that OpenAI is “out of GPUs.” Now, with direct access to CoreWeave’s resources and an ownership stake in the company, OpenAI is becoming more independent.
CoreWeave’s Rise in the AI Sector
Founded by former hedge fund executives, CoreWeave initially started as a crypto mining operation before shifting its focus to AI cloud services. The company’s three co-founders have cashed out $488 million in shares, yet CoreWeave still carries a large debt of $7.9 billion.
In conclusion, the agreement between OpenAI and CoreWeave is a game-changer that could redefine the AI infrastructure market. Whether it signifies a permanent shift away from Microsoft is yet to be seen, but the deal certainly gives OpenAI access to the computing power it needs to move forward in a competitive market.
