OpenAI seals $12 billion deal with CoreWeave to expand cloud computing footprint

SAN FRANCISCO: OpenAI has secured a landmark contract worth nearly $12 billion with CoreWeave and will also acquire an equity stake in the cloud computing provider, a strategic move that positions OpenAI ahead of its anticipated $25 billion public offering.

The artificial intelligence company has formalised a five-year agreement in which CoreWeave will supply the necessary computing power for training and deploying OpenAI’s AI models, reported FT.  

This initiative marks OpenAI’s intent to diversify its computing resources, reducing its dependence on Microsoft, its primary partner, for such needs.

Last week, reports from the Financial Times indicated that Microsoft had decided to abandon a proposed partnership with CoreWeave, a setback attributed to the cloud provider’s challenges with service delivery. This decision significantly impacted CoreWeave, based in New Jersey, which recently filed for a New York initial public offering aiming to raise around $4 billion.

OpenAI’s new $11.9 billion agreement serves as a crucial alternative, potentially positioning it to outpace Microsoft, which generated 62 percent of CoreWeave’s total revenue last year based on public filings. Microsoft has previously committed to allocating $10 billion towards CoreWeave’s services by the year 2030.

OpenAI board rejects Elon Musk-led buyout offer

In addition to the service agreement, OpenAI’s collaboration with CoreWeave includes a $350 million equity investment in the company at the time of the IPO. Founded in 2017 primarily as a cryptocurrency mining firm, CoreWeave has since adapted its business model to provide cloud services, enabling technology companies to develop and train AI models using high-performance graphics processing units (GPUs) from Nvidia.

The company has become one of Nvidia’s largest customers, amassing over 250,000 of the company’s AI GPUs.

This collaboration with CoreWeave represents OpenAI’s ongoing efforts to enhance the diversity of computing resources available to it. Co-founder and CEO Sam Altman has emphasized that infrastructure will be a critical factor in the competition to develop advanced AI models. Meanwhile, Microsoft CEO Satya Nadella has expressed concerns regarding a potential glut of computing resources as major technology firms invest substantial sums into data centres.

Recently, OpenAI has also partnered with SoftBank on a massive $500 billion data centre initiative termed ‘Stargate’ and entered into agreements with Oracle concerning data centres.