CoreWeave's Path to Success: CEO Michael Intrator Discusses Debt and Market Debut

In a recent interview with CNBC's Jim Cramer, CoreWeave CEO Michael Intrator provided insights into the cloud computing company's market debut. He shed light on how raising a significant amount of debt has become crucial for CoreWeave's operations.

Intrator emphasized that "the debt is the engine, it's the fuel for this company." He explained that the company seeks lucrative contracts with clients requiring extensive computing resources. Once these contracts are secured, CoreWeave approaches its network of lenders to obtain the necessary funding to establish the computing clusters that generate revenue for the business.

CoreWeave launched its initial public offering (IPO) on a challenging day for the stock market, particularly affecting technology stocks, which contributed to a 2.7% drop in the Nasdaq Composite. The company, specializing in artificial intelligence technology delivered through the cloud, opened its stock at $39 but ended the day at $40, successfully raising $1.5 billion in its share sale. This IPO marks the largest tech IPO in the United States since 2021. However, the share price was set lower than the anticipated range of $47 to $55. Intrator noted that the final pricing reflected the market's purchasing interest amidst ongoing economic challenges.

According to reports, CoreWeave has accumulated nearly $13 billion in debt, a significant portion of which is directed towards acquiring GPUs for its data centers both in the U.S. and overseas. Intrator clarified that while the company carries this debt, it also possesses revenue contracts that exceed the amount of debt on its balance sheet.

Prior to going public, CoreWeave secured a deal to purchase 250,000 graphics chips from Nvidia, many of which belong to the highly sought-after Hopper generation. This generation of chips has been in short supply in recent years, raising concerns about their future relevance as advances in AI continue rapidly. Nvidia has already started distributing its successor model, Blackwell.

Despite these concerns, Intrator affirmed confidence in the company's trajectory, pointing to a recent contract with OpenAI valued at nearly $12 billion. This deal spans five years and includes the option for two one-year extensions. Intrator believes agreements like this indicate that clients expect long-term value from the infrastructure being built.

He stated, "Those same buyers will come back, they will buy new infrastructure that is the most cutting edge for their next models. And then they'll take this earlier infrastructure and use it for other use cases in their company that requires really large bulk compute."

CoreWeave, Michael Intrator, Debt