- The agreement between Microsoft and CoreWeave could be worth billions of dollars over several years, people familiar with the matter said.
- CoreWeave offers Nvidia graphics cards that other companies rent out.
- Nvidia has invested $100 million in CoreWeave, which was valued at $2 billion as of April.
Microsoft CEO Satya Nadella
Jordan Novet | CNBC
Microsoft’s massive investment in OpenAI has put the company at the center of the artificial intelligence boom. But it’s not the only place the software giant is opening its wallet to meet the rising demand for AI-powered services.
CNBC has learned from those in the know that Microsoft has agreed to spend potentially billions of dollars over several years on cloud computing infrastructure from startup CoreWeave, which announced on Wednesday it had raised $200 million. This funding comes just over a month after the company hit $2 billion.
CoreWeave sells simplified access to Nvidia’s graphics processors, or GPUs, which are considered the best on the market for running AI models. Microsoft signed the CoreWeave deal earlier this year to ensure OpenAI, which powers the viral ChatGPT chatbot, has sufficient computing power going forward, said one of the people, who asked not to be named for confidentiality reasons. OpenAI relies on Microsoft’s Azure cloud infrastructure for its high computing requirements.
Both Microsoft and CoreWeave declined to comment.
The rush into generative AI began late last year after OpenAI unveiled ChatGPT to the public, showing that AI can process human input and provide sophisticated responses. Many companies, including Google, have since rushed to integrate generative AI into their products. And Microsoft has been busy releasing chatbots for its own services like Bing and Windows.
Given the high demand for its infrastructure, Microsoft needs additional ways to leverage Nvidia’s GPUs. CoreWeave CEO Michael Intrator declined to comment on the Microsoft deal in an interview last month, but said revenue “increased by multiples from 2022 to 2023.”
Nvidia-backed startup Coreweave is based in Roseland, New Jersey and has 160 employees.
CoreWeave
Hedge fund Magnetar Capital’s funding of CoreWeave, announced Wednesday, was an expansion of a $221 million funding in April. Nvidia invested $100 million in previous funding, Intrator said. CoreWeave was founded in 2017 and employs 160 people.
Nvidia’s stock price is up 170% this year. The company’s market cap briefly topped $1 trillion for the first time this week, after the company posted a July quarter guidance that was over 50% ahead of Wall Street estimates.
The chipmaker’s growth will be “largely data center driven, reflecting a sharp increase in demand related to generative AI and large language models,” Nvidia CFO Colette Kress said on last week’s conference call. OpenAI’s GPT-4 large language model, trained with Nvidia GPUs using extensive online data, is at the heart of ChatGPT.
Kress mentioned CoreWeave by name on the conference call, and in March, Nvidia CEO Jensen Huang mentioned CoreWeave in his presentation at Nvidia’s GTC conference.
CoreWeave’s website says the company can provide computing power that is “80% cheaper than traditional cloud providers.” CoreWeave offers, among other things, Nvidia’s A100 GPUs, which developers can also find via the Amazon, Google and Microsoft clouds.
Additionally, CoreWeave has more affordable Nvidia A40 GPUs marketed for visual computing, while the A100 targets AI, data analysis, and high-performance computing. Some CoreWeave customers have had trouble getting enough GPU performance on large clouds, Intrator said. Occasionally Nvidia prospects have asked for A100 or newer H100 GPUs, and the company has recommended A40 GPUs instead.
These “will do an excellent job at a very affordable price,” Intrator said.
Microsoft has been in talks with Oracle about the two companies renting servers from each other if they need additional capacity, The Information reported earlier this month, citing an unnamed person.
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