Microsoft Partners with CoreWeave, Backed by Nvidia, for AI Computing Power Worth Billions

Microsoft deal

Microsoft is making significant investments to meet the growing demand for AI-powered services, and one of its recent moves involves a partnership with startup CoreWeave, backed by Nvidia. According to sources familiar with the matter, Microsoft has agreed to spend potentially billions of dollars over multiple years on cloud-computing infrastructure provided by CoreWeave. This deal comes shortly after CoreWeave raised $200 million in funding and achieved a valuation of $2 billion.

CoreWeave specializes in offering simplified access to Nvidia’s high-performance graphics processing units (GPUs), which are renowned for running AI models. Microsoft signed the agreement with CoreWeave to ensure that OpenAI, the operator of the viral ChatGPT chatbot, has sufficient computing power. OpenAI relies on Microsoft’s Azure cloud infrastructure to meet its substantial computational needs.

As the demand for AI infrastructure continues to surge, Microsoft requires additional avenues to leverage Nvidia’s GPUs effectively. CoreWeave CEO Michael Intrator noted a significant increase in revenue from 2022 to 2023, indicating the company’s substantial growth. However, neither Microsoft nor CoreWeave provided official comments on the partnership.

CoreWeave, with its headquarters in Roseland, New Jersey, and a workforce of 160 employees, received funding from hedge fund Magnetar Capital, adding to the $221 million raised in April. Nvidia has been a prominent investor, contributing $100 million to CoreWeave’s prior financing round. Founded in 2017, CoreWeave has positioned itself as a cost-effective alternative to legacy cloud providers, offering Nvidia’s A100 and A40 GPUs, among other options.

The strategic investment aligns with Nvidia’s overall growth strategy, driven primarily by data center demand related to generative AI and large language models. Nvidia’s finance chief, Colette Kress, highlighted the importance of CoreWeave in supporting OpenAI’s ChatGPT, which relies on Nvidia GPUs for training its GPT-4 large language model. The success of CoreWeave’s cost-effective computing power offerings is evident in its clients’ satisfaction, as they can access high-performance GPUs at a reduced cost compared to major cloud providers.

Microsoft’s collaboration with CoreWeave follows discussions with Oracle regarding potential server rental arrangements to address increased capacity needs. These initiatives showcase Microsoft’s commitment to ensuring it has robust infrastructure in place to meet the growing demand for AI-powered services and support OpenAI’s groundbreaking AI technologies.

In conclusion, Microsoft’s agreement with CoreWeave, backed by Nvidia, represents a substantial investment in AI computing power. By leveraging CoreWeave’s simplified access to Nvidia’s GPUs, Microsoft aims to cater to the rising demand for AI-powered services, ensuring the scalability and efficiency of its offerings. This partnership reflects the importance of strategic collaborations in meeting the computational requirements of cutting-edge AI technologies.