Nvidia is a significant investor in CoreWeave, and also sells the cloud company a lot of chips

CoreWeave has become a hot stock in its first couple months of trading.

CoreWeave Inc.’s stock has been a big gainer since the company went public in March, with the rally fueled by optimism around the cloud startup’s ability to gain Big Tech customers as it leverages Nvidia Corp.’s backing.

But one analyst sees the relationship between CoreWeave and Nvidia as “very unusual” — and believes that as CoreWeave’s stature grows on Wall Street, investors in both companies should pay attention to the links between the two.

CoreWeave — which went from being a cryptocurrency-mining company called Atlantic Crypto Corp., to a publicly traded cloud provider with a market capitalization of about $56 billion, according to data from FactSet — rents access to data centers bulked up by Nvidia chips.

CoreWeave went public on March 28, pushing through an initial public offering that struggled. The company was expected to sell 49 million shares in the IPO, priced between $47 and $55, but demand wasn’t sufficient; CoreWeave could only sell 37.5 million shares, with the IPO pricing at just $40 a share. Nvidia offered to put in a $250 million order at $40 a share, CNBC reported. The stock started trading at $39 but closed its first day at $40.

Gil Luria, head of technology research at D.A. Davidson, says it’s “very unusual” for an IPO to include strategic investors like Nvidia.

Prior to that, CoreWeave had an agreement to provide Nvidia with infrastructure and platform services worth $320 million, a contract it entered into in April 2023. At the time of CoreWeave’s IPO filing, the company listed that Nvidia owned about 6% of CoreWeave shares. A recent 13-G filing, revealing Nvidia’s holdings as of March 31, showed a 7% stake.

“I want to say it’s unprecedented, but at the very least, extraordinarily rare, for an IPO to be anchored by a customer, or a vendor, or any corporate,” Luria said.

Since CoreWeave’s IPO, the stock has been a big gainer, up by more than 192%.

CoreWeave has been a significant recipient of Nvidia’s products: All the GPUs used in its infrastructure are Nvidia’s, according to its latest 10-Q filing. Luria estimates that in 2024, about 10% of Nvidia’s chips went to neocloud startups, a term used to describe artificial-intelligence cloud providers — and he thinks most of that was allocated to CoreWeave. Meanwhile, hyperscalers like Microsoft Corp., Alphabet Inc.’s Google and Amazon.com Inc., which have their own chips but mostly rely on Nvidia’s, continue to cite capacity constraints for their cloud services, said Luria.

During an Nvidia earnings call in November, Chief Financial Officer Collette Kress noted that Blackwell, the company’s latest chip family, had supply constraints and that demand was expected to exceed supply for several quarters in fiscal 2026, which is the year that’s now underway.

Nvidia has invested in other neocloud companies during their capital-raising rounds, too, including Lambda Inc. and Nebius Group, as well as Crusoe Energy’s AI cloud segment. Initially, Microsoft, Amazon, Alphabet and Oracle Corp. were the providers of AI-capable GPU rentals. But now, Alphabet and Microsoft have resorted to renting data-center space from CoreWeave, Luria said.

A Nvidia spokesperson declined to comment. CoreWeave did not respond to a MarketWatch request for comment.

Nvidia’s investment initiatives in smaller cloud providers could be part of an effort to bolster U.S. infrastructure in preparation for an AI boom. And CoreWeave’s future customers could eventually become smaller companies that are integrating AI into their businesses. Nvidia’s AI investments go beyond cloud providers and also include companies working in healthcare, drug discovery and manufacturing that make use of Nvidia tools.

However, for Luria, as long as CoreWeave’s business relies on capacity-constrained hypserscalers as customers, he isn’t sold on the stock. A May 19 note from D.A. Davidson read that Microsoft and Google aren’t likely to be long-term customers once they build capacity, since CoreWeave is a competitor. In CoreWeave’s latest 10-Q filing, the company listed among its risk factors that a substantial portion of its revenue comes from a limited number of customers. For example, from January to March 2025, Microsoft made up about 72% of its revenue.

D.A. Davidson has an underperform rating on CoreWeave’s stock with a price target of $36 — below where it traded when it went public and drastically below where the stock was trading on Friday, near $117.

Perhaps the main takeaway for CoreWeave investors is that the stock’s key driver shouldn’t be based on the Big Tech names it scores. Instead, the focus should be on whether the company can diversify its customer base and build a stable business beyond Nvidia’s support.