“CoreWeave’s IPO Miss Raises Questions About AI Market and Broader Economic Sentiment”

CoreWeave, a provider of cloud-based computing power for the artificial intelligence sector, completed its long-anticipated initial public offering this week—marking the largest I.P.O. of the year thus far. However, the results fell significantly short of expectations, raising concerns not just about the company’s individual performance, but about investor sentiment toward the broader I.P.O. market and AI-related businesses.

Despite a strategic investment from Nvidia, which committed to purchasing additional shares during the offering, CoreWeave reduced both the size and valuation of its public debut. The company priced its shares at $40—well below the original $47 to $55 target range—and sold 37.5 million shares, approximately 23% fewer than planned. In total, CoreWeave raised $1.5 billion, securing a valuation of about $23 billion, compared to an earlier goal of $35 billion and $4 billion in proceeds.

These adjustments come amid a challenging climate for public offerings. Broader market volatility, driven in part by ongoing uncertainty surrounding President Trump’s tariff policy and inflationary pressures, has contributed to investor caution. “It has been a brutal time for markets in general,” said Samuel Kerr, head of equity capital markets at Mergermarket. “It shows you that there is very little appetite to put forward this kind of risk transaction at the moment.”

Founded in 2017 as a cryptocurrency mining firm, CoreWeave leveraged Nvidia GPUs originally used for crypto mining and pivoted to AI computing infrastructure following the release of ChatGPT in 2022. The company has since raised $2.3 billion in venture capital and reached a $19 billion valuation in private markets prior to the IPO.

While revenue surged to $1.9 billion in 2023—up from $229 million in 2022—the company remains unprofitable and spent nearly $1 billion servicing debt. Its founders, Michael Intrator, Brian Venturo, and Brannin McBee, continue to lead the company and collectively hold around 30% equity and approximately 80% of voting power due to a special share class.

The IPO was closely watched as a potential bellwether for AI-related public offerings. However, some analysts caution that CoreWeave is not representative of the broader AI landscape. Unlike model developers such as OpenAI or Anthropic, CoreWeave’s business is highly capital-intensive and dependent on a small number of clients, including Microsoft, Meta, and OpenAI. Its history as a crypto startup and its significant debt obligations also make it a unique—and potentially less appealing—investment case.

Despite strong enthusiasm for AI in recent years, particularly for the so-called “Magnificent Seven” tech giants, investor enthusiasm appears to be moderating. Nvidia, a key player in the AI ecosystem and CoreWeave stakeholder, has seen its share price decline 7% since Wednesday.

Economic Signals and Market Outlook

The CoreWeave IPO comes amid a broader reassessment of market conditions. On the consumer front, companies such as Lululemon have reported weaker-than-expected outlooks, citing macroeconomic and geopolitical uncertainty. Inflationary pressures remain top of mind for both businesses and investors.

The Federal Reserve’s preferred inflation gauge—the Personal Consumption Expenditures (PCE) index—was set for release Friday morning. Analysts expected core PCE to rise 2.7% year-over-year in February, slightly above the Fed’s 2% target. Month-over-month, estimates pointed to a 0.3% increase, with upward pressure coming from categories such as apparel, furniture, and household goods. On a more positive note, shelter costs appeared to be stabilizing.

Meanwhile, revised consumer sentiment data from the University of Michigan was also scheduled for release, offering further insight into household spending behavior. Earlier in the week, a report from The Conference Board showed consumer confidence had declined to its lowest level in 12 years, driven by concerns over inflation and tariffs.

Trade Policy Impacts

President Trump’s recent moves on tariffs are beginning to reshape the automotive and legal landscapes. Trump has pressed automakers not to raise prices in response to new import tariffs—a move that leaves many companies grappling with how to absorb higher costs without alienating customers or incurring political risk.

One notable exception is Ferrari, which announced it would raise U.S. prices by up to 10% in response to tariffs on European imports. Analysts view Ferrari’s customer base as largely immune to price sensitivity. The company’s shares rose nearly 3% following the announcement and multiple analyst upgrades.

Elsewhere in the auto sector, economists such as Arthur Laffer have warned that Trump’s tariff approach—if not carefully managed—could inflict lasting damage on U.S. manufacturing. Laffer emphasized the need to maintain temporary exemptions for trade under the U.S.-Mexico-Canada Agreement to avoid unintended consequences for the industry.

Legal and Political Developments

Meanwhile, in the legal sphere, Skadden, Arps, Slate, Meagher & Flom has reportedly initiated discussions with Trump advisers about avoiding inclusion in a potential executive order targeting law firms that have clashed with the administration. The move comes after similar actions were directed at other firms, including WilmerHale, where former Special Counsel Robert Mueller was once a partner.

A separate federal court order has directed several Trump administration officials to preserve communications tied to a leaked Signal message thread discussing U.S. operations in Yemen. The ruling has sparked criticism from some Republicans, while others have expressed concern about the potential national security implications of unsecured communication channels.

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