With Microsoft and OpenAI playing each other openly in the AI cloud space now, ‘OpenAI’ has entered into a five-year, $11.9 billion agreement with CoreWeave – a cloud service provider specialized in GPU-intensive workloads. This partnership ensures that the ChatGPT maker will have access to CoreWeave’s advanced cloud computing infrastructure, which is essential for training and deploying large-scale AI models, and also helping it diversify away from Microsoft and others.
Under this deal, the AI giant will acquire a stake in Nvidia-backed CoreWeave worth approximately $350 million. This equity will be issued through a private placement during CoreWeave’s upcoming initial public offering (IPO). Notably, CoreWeave will not receive direct proceeds from this share issuance. Instead, it serves to solidify the strategic partnership between the two companies.
This move is particularly noteworthy because Microsoft (a prominent investor in OpenAI) has also been a major client of CoreWeave. This further complicates the relationship between Microsoft and OpenAI, especially at a time when OpenAI’s rapid growth positions it as a competitor to Microsoft in attracting enterprise clients.
In fact, earlier this year, Microsoft announced a change in its partnership with OpenAI, moving away from its previous exclusive role as the cloud provider for OpenAI’s computing needs. Under the revised agreement, Microsoft retains a ‘right of first refusal’ (ROFR), giving it the first opportunity to provide cloud resources to OpenAI. However, OpenAI now has the option to seek services from other cloud providers, such as Oracle.
Speaking more about a newly emerged rivalry, in December 2024, a few reports suggested that despite investing $13.75 billion in OpenAI since 2019, Microsoft is exploring alternatives to the ChatGPT maker’s AI model, particularly for its 365 Copilot. And recently in yet another sign of Microsoft ditching its exclusivity with OpenAI, the Redmond-headquartered company reportedly started developing its own AI models, known as MAI, aiming to rival OpenAI’s offerings. Microsoft is also said to be testing AI models from xAI, Meta, and DeepSeek as potential replacements for OpenAI’s technology within Copilot.
Meanwhile, coming back to the latest move, the deal is expected to provide a major boost to CoreWeave ahead of its anticipated IPO, positioning it as a key player in the AI infrastructure market. The collaboration comes at a time when investor interest in generative AI is rapidly increasing, driving a surge in global demand for infrastructure like data centers and high-powered servers.
Talking about CoreWeave itself, the US-based company ended 2024 with 32 data centers and over 250,000 Nvidia GPUs. They still plan to open 10 more data centers in 2025. So far, CoreWeave – valued at $19 billion in May 2024 – provides AI computing services to major tech companies, including Microsoft, Meta, IBM, and Cohere. The company competes with giants like Amazon Web Services (AWS) and Google Cloud.
