Is CoreWeave a Buy After This $14 Billion News?

CoreWeave (CRWV 0.13%) has grabbed investors' attention for a few reasons over the past several months. The company has secured a close relationship with artificial intelligence (AI) chip giant Nvidia, and this is a key to the success of its own business, which is offering AI compute capacity to customers. This young AI player also announced soaring revenue growth over the past two quarters, reporting results as it became a publicly traded company. Finally, since that March initial public offering, CoreWeave's stock has surged more than 200%. But that isn't the end of the good news. In recent weeks, CoreWeave has demonstrated the strength of its business by signing billion-dollar deals with customers, from an expansion of an agreement with research lab OpenAI to a new $14 billion deal with technology giant Meta Platforms (META -2.25%). Is CoreWeave a buy after this latest news? Image source: Getty Images. GPUs for rent First, a note about CoreWeave's business and why customers have been flocking to it. The company operates in the GPU-as-a-service (GPUaaS) market, meaning it offers graphics processing units (GPUs) for rent to customers. They can rent this compute for a very short period of time, on an hourly basis, or for a longer-term project. CoreWeave competes with other cloud providers, but it stands out by specifically focusing on AI workloads, and this helps it optimize efficiency for customers. Larger cloud companies such as Microsoft or Amazon via Amazon Web Services are more general purpose, offering AI services as well as a range of other products and services beyond AI. Nvidia clearly is a supporter of the CoreWeave business model as it has invested in the stock and now holds 7% of the company. And just a few weeks ago, Nvidia signed an agreement with CoreWeave pledging to buy any of its unused capacity through 2032. This relationship has other benefits, too, as CoreWeave, which operates a fleet of more than 250,000 GPUs across three dozen data centers, has been the first to make Nvidia's latest innovations available to customers. Working with OpenAI In recent days, OpenAI expanded its agreement with CoreWeave to more than $22 billion from an initial agreement worth about $12 billion. This allows OpenAI to use CoreWeave's capacity to train its latest advanced models. And earlier this week, CoreWeave announced a $14.2 billion cloud infrastructure deal with Meta, offering this "Magnificent Seven" company access to CoreWeave compute. You may think of social media when you think of Meta -- since it is the owner of leading apps such as Facebook and Instagram -- but this company also is a major player in the AI space. A couple of years ago, Meta announced this push into AI and it has developed its own large language model and poured billions of dollars into AI investments. The goal is to use AI tools, such as Meta's AI assistant, to keep users on its apps longer and to harness AI to improve the advertising experience. All of this could supercharge Meta's advertising revenue over the long run, and Meta's research also could lead to other products and services. This makes Meta an important AI customer for CoreWeave. Should you buy CoreWeave now? So, is CoreWeave a buy after this latest news? The Meta deal, along with the expanded OpenAI contract, shows that demand for CoreWeave's services is there -- from AI leaders. And considering infrastructure spending is forecast to reach into the trillions by the end of the decade, demand and revenue could continue roaring higher. In the latest quarter, CoreWeave announced a tripling of revenue to $1.2 billion, and though the company isn't yet profitable, this is understandable at this stage. Its main focus right now is investing to keep up with this customer demand for capacity. Still, CoreWeave isn't the best choice for a cautious investor at this point. So if this is your investment style, you should keep the stock on your watch list until the company takes more steps toward profitability. But, if you're an aggressive investor comfortable with more risk, CoreWeave makes a fantastic buy now. These latest contracts show that the industry's leaders are turning to this up-and-coming AI player, and this could result in exploding growth as this AI boom advances.