CoreWeave has reduced the size of its U.S. initial public offering (IPO) and priced its shares below the initially indicated range, signaling a more cautious approach to its market debut. The Nvidia-backed company announced on Thursday that it would now sell 37.5 million shares, a 23.5% reduction from its original plan, at $40 per share—significantly lower than the expected range. Out of these, 36.6 million shares will be offered by CoreWeave itself, while 910,000 shares will be sold by existing stockholders.

Nvidia is expected to support the IPO with a $250 million order at the offer price, according to a source familiar with the matter. The sale is projected to raise around $1.5 billion, valuing CoreWeave at approximately $23 billion on a fully diluted basis. This revision comes amid a market environment where investors are becoming increasingly cautious about high-risk IPOs, particularly in the AI and tech infrastructure sectors.

The company’s roadshow, which began last week, did not generate the strong investor enthusiasm that was initially anticipated. Sources familiar with the situation indicated that concerns over CoreWeave’s long-term growth potential, financial risks, and capital-intensive business model contributed to the lukewarm reception. A key issue for investors is the company’s reliance on Microsoft, whose evolving AI datacenter strategy could significantly impact demand for GPUs, the specialized chips used in artificial intelligence applications. While CoreWeave benefits from strong free cash flow, investors remain wary of the company’s financial commitments and whether it can sustain its aggressive expansion.

By the end of 2024, CoreWeave had deployed over 250,000 Nvidia GPUs, establishing itself as a major player in the AI infrastructure space. However, the market response to its IPO suggests a reassessment of AI infrastructure valuations, with some investors questioning whether the sector can sustain its rapid growth. Lukas Muehlbauer, a research analyst at IPOX, noted that while CoreWeave’s business model is not fundamentally flawed, the reaction to its IPO indicates a shift in how AI infrastructure investments are being valued.

Originally, CoreWeave and its existing investors had planned to sell 49 million shares in the offering, with a price range of $47 to $55 per share, aiming to raise as much as $2.7 billion. That would have valued the company at up to $32 billion. However, the decision to downsize reflects broader market conditions, as the number of U.S.-listed equity capital market deals, including IPOs and share block trades, fell to 187 in the first quarter of this year from 243 in the same period last year, according to Dealogic data. The total value of these transactions also declined from $74.02 billion to $63.48 billion.

Despite ongoing enthusiasm for AI investments, concerns are mounting over uneven data center spending, with only a few major players driving growth while others struggle. Adding to the uncertainty, competition from China’s DeepSeek, a low-cost AI rival, has raised fears about increasing pressure on AI infrastructure spending. CoreWeave’s financial structure has also drawn scrutiny. The company had around $8 billion in debt last year and leases all 32 of its data centers rather than owning them, leading to $2.6 billion in operating lease liabilities. In its IPO filing, CoreWeave stated that approximately $1 billion of the proceeds would be used to pay down debt, though it also indicated plans to continue borrowing. The company has yet to turn a profit, which has made some investors hesitant, as recent IPO trends show skepticism toward businesses without a clear path to profitability.

Ahead of its IPO, CoreWeave secured partnerships with key AI players, including OpenAI, with which it signed an $11.9 billion infrastructure deal earlier this month. As part of the offering, CoreWeave will also issue $350 million in shares to OpenAI through a private placement. Morgan Stanley, J.P. Morgan, and Goldman Sachs are serving as the lead underwriters for the IPO. The first report on CoreWeave’s decision to downsize the offering was published by Semafor.

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