CoreWeave to offer compute capacity in Google's new cloud deal with OpenAI
CoreWeave 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 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, Microsoft and Google and so-called neocloud companies like Coreweave. Hyperscalers are large cloud service providers that offer massive-scale data centres and cloud infrastructure. The insatiable hunger for computing resources has generated major investment commitments and turned rivals into partners. Backed by OpenAI and Nvidia, Coreweave signed up Google as a customer in the first quarter. CoreWeave, Google and OpenAI declined to comment.
CoreWeave, 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 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 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 centre 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 and Microsoft. CoreWeave's deal with Google coincides with Microsoft's re-evaluation of its data centre strategy, including withdrawing from certain data centre leases. Microsoft, once Coreweave's 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, backed by Nvidia, 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.
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