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Company downsized IPO, priced below range

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Investors flag heavy Microsoft ( MSFT ) reliance

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Debut to test AI demand amid IPO uncertainty

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Stock indicated to open above $40 IPO price

(Updates with latest indications in paragraphs 1 and 4)

By Niket Nishant and Manya Saini

March 28 (Reuters) - CoreWeave's ( CRWV ) shares were

set to open nearly 18% above their offer price in their Nasdaq

debut on Friday, giving the Nvidia ( NVDA )-backed AI infrastructure firm

a potential valuation of $27.4 billion on a fully diluted basis.

A strong debut would be a welcome sign for the company,

especially since its lofty targets already took a hit on

Thursday when it had to downsize its initial public offering.

It may also offer hope to other IPO candidates that smooth

listings are achievable with tempered valuations, even at a time

when equity markets are already grappling with tariff-related

turmoil.

The stock was indicated to open at $47, compared with the

IPO price of $40.

"The U.S. IPO market is at an inflection point. This next

batch of deals will determine whether the U.S. IPO momentum

continues through the second quarter, or whether issuers decide

the risk now isn't worth it," said Samuel Kerr, head of equity

capital markets at Mergermarket.

The debut will also test the limits of the AI hype, given

increasing frustration over Big Tech's massive spending spree

and fears of competition from China's artificial intelligence

startup DeepSeek.

While investors have propelled AI-related companies such as

Nvidia ( NVDA ) and Microsoft ( MSFT ) to stratospheric

valuations, CoreWeave ( CRWV ) has stirred concerns among risk-averse

investors.

The company provides access to data centers and high-powered

Nvidia ( NVDA ) chips, which have become the most sought-after resource

in the race to develop AI applications.

However, 77% of CoreWeave's ( CRWV ) revenue last year came from just

its top two customers, including Microsoft ( MSFT ).

At its roadshow, some expressed worries about CoreWeave's ( CRWV )

heavy reliance on Microsoft ( MSFT ) as the tech behemoth's shifting AI

data center strategy could impact long-term demand for chips.

CoreWeave's ( CRWV ) capital-intensive business model also raised

questions about sustainability, sources said.

"I don't know how receptive the market's going to be," said

Kamran Ansari, managing partner at Kapital Ventures, noting that

while the growth of the company has been meteoric, its long-term

sustainability is yet to be tested.

CoreWeave ( CRWV ) had around $8 billion in debt as of last year. The

company said earlier this month it plans to use about $1 billion

of the IPO proceeds to pay down debt.

It also leases its 32 data centers and some equipment

instead of owning them, resulting in operating lease liabilities

of $2.6 billion.

While investors appear comfortable with the company's high

leverage since it has strong free cash flow, the risk of

commitments not being fulfilled remains a worry.

The startup has also consistently posted losses, and IPO

investors in the last few years have been wary of backing

companies with no history of profitability.

FROM CRYPTO TO AI

Founded as an Ethereum-focused crypto miner in 2017,

CoreWeave ( CRWV ) pivoted to AI a few years later. It shuttered its

mining business after Ethereum's 2022 upgrade, "The Merge,"

slashed rewards for miners.

It signed a five-year contract worth $11.9 billion with

OpenAI in the lead-up to the IPO, forging ties with the most

prominent startup in the industry.

CoreWeave's ( CRWV ) revenue has also grown at a breakneck pace,

climbing more than eight-fold last year.

But it may need to do more to convince investors.

"For most venture-backed deep tech startups, it's going to

take more than hype to make it through the public markets right

now," said Anthony Georgiades, founder and general partner at

Innovating Capital.

CoreWeave's ( CRWV ) shares are set to trade under the symbol "CRWV".

The IPO was underwritten by a syndicate of 18 banks, including

Morgan Stanley, J.P.Morgan and Goldman Sachs.