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Coreweave ( CRWV ) to provide compute capacity for Google's cloud

units

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Coreweave's ( CRWV ) deal with Google helps revenue diversification

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Google's cloud unit to benefit from OpenAI's growth

By Krystal Hu, Kenrick Cai

June 11 (Reuters) - CoreWeave ( CRWV ) has emerged as a

winner in Google's newly signed partnership with OpenAI, sources

familiar with the matter told Reuters, in the latest example of

the voracious appetite for computing resources in the

artificial-intelligence industry and the formation of new

alliances to meet them.

The so-called neocloud company, which sells cloud computing

services built on Nvidia's ( NVDA ) graphics processing units,

is slated to provide computing capacity to Google's cloud unit,

and Alphabet's Google will then sell that computing

capacity to OpenAI to meet the growing demand for services like

ChatGPT, the sources said. Google will also provide some of its

own computing resources to OpenAI, added the sources, who

requested anonymity to discuss private matters.

The details of the arrangement, first reported by Reuters on

Tuesday, highlight the evolving dynamics between hyperscalers

like Amazon.com ( AMZN ), Microsoft ( MSFT ) and Google and

so-called neocloud companies like Coreweave ( CRWV ). Hyperscalers are

large cloud service providers that offer massive-scale data

centers and cloud infrastructure. The insatiable hunger for

computing resources has generated major investment commitments

and turned rivals into partners.

Backed by OpenAI and Nvidia ( NVDA ), Coreweave ( CRWV ) signed up Google as a

customer in the first quarter.

CoreWeave ( CRWV ), Google and OpenAI declined to comment.

CoreWeave ( CRWV ), a specialized cloud provider that went public in

March, has already been a major supplier of OpenAI's

infrastructure. It has signed a five-year contract worth $11.9

billion with OpenAI to provide dedicated computing capacity for

OpenAI's model training and inference. OpenAI also took a $350

million equity stake in CoreWeave ( CRWV ) in March.

This partnership was further expanded last month through an

additional agreement worth up to $4 billion, extending through

April 2029, underscoring OpenAI's escalating demand for

high-performance computing resources.

Industry insiders say adding Google Cloud as a new customer

could help CoreWeave ( CRWV ) diversify its revenue sources, and having a

credible partner with deep pockets like Google enables the

startup to secure more favorable financing terms to support

ambitious data center buildouts across the country.

This could also boost Google's cloud unit, which generated

$43 billion in sales last year, allowing it to capitalize on the

growth of OpenAI, which is also one of its largest competitors

in areas like search and chatbots. It positions Google as a

neutral provider of computing resources in competition with

peers such as Amazon ( AMZN ) and Microsoft ( MSFT ).

CoreWeave's ( CRWV ) deal with Google coincides with Microsoft's ( MSFT )

re-evaluation of its data center strategy, including withdrawing

from certain data center leases. Microsoft ( MSFT ), once Coreweave's ( CRWV )

largest customer, accounting for about 62% of its 2024 revenue,

is also renegotiating with OpenAI to revise the terms of their

multibillion-dollar investment, including the future equity

stake it will hold in OpenAI.

CoreWeave ( CRWV ), backed by Nvidia ( NVDA ), has established itself as a

fast-rising provider of GPU-based cloud infrastructure in the AI

wave. While its public debut in March was met with a lukewarm

response due to concerns over its highly leveraged capital

structure and shifting GPU demand, the company's stock has

surged since its IPO price of $40 per share, gaining over 270%

and reaching a record high of $166.63 in June.