This Nvidia-Backed AI Stock Rallied Hard After Inking a $14B Cloud Deal With Meta Platforms

Nvidia( Nasdaq:NVDA)-backed AI cloud computing firm CoreWeave (Nasdaq:CRWV) shares surged almost 12% on Tuesday to $136.85 (£101.35) after it announced a $14.2 billion (£10.5 billion) long-term cloud deal with Meta Platforms (Nasdaq:META). The company operates a network of US and European data centres to offer cloud-based infrastructure, like GPU hardware and specialised software, to enterprises and AI labs.

The CoreWeave stock is up 250% since it went public in March through an initial public offering. The latest stock price uptrend signals a rebound from a sluggish September when several insiders sold off shares.

Under the massive deal with Meta Platforms, CoreWeave will offer Meta access to Nvidia's GB300 server racks, each of which packs 72 Nvidia Blackwell AI GPUs. 'They loved our infrastructure in earlier contracts and came back for more,' CoreWeave CEO Michael Intrator told Bloomberg.

Meta has been aggressively spending on AI infrastructure, which includes a 4 million-square-foot data centre in Louisiana. The company also increased its 2025 capital expenditure guidance range to between $66 billion (£48.8 billion) and $72 billion (£53.2 billion) in its latest quarterly report.

The CoreWeave-Meta deal follows the AI data centre operator's $6.5 billion (£4.8 billion) agreement last week with Microsoft (Nasdaq:MSFT)-backed OpenAI.

Hedgeye Risk Management analyst Felix Wang, who has a short position on CoreWeave, described the deal as a positive surprise. Meanwhile, Bokeh Capital Partners tech analyst Kimberly Forrest said the collaboration is good for both companies and indicates that the current demand for high-end AI chips is 'limitless.'

However, Futurum Group tech analyst David Nicholson had doubts about the CoreWeave-Meta deal. He said there is an 'odd market dynamic' at play, given that Meta chose to rent data centre capacity from CoreWeave instead of buying Nvidia chips directly for its own data centres.

'It doesn't make sense that Meta would not prefer to do what it does with all of its other technology, and that is build and manage it on its own,' he said.

The $14 billion deal comes amid a slew of major AI deals as megacap tech stocks ramp up compute capacity in data centres to power their AI initiatives. Some of those deals include Nvidia's $100 billion (£74 billion) investment in OpenAI as well as OpenAI's reported $300 billion (£221.9 billion) contract with Oracle (NYSE:ORCL). Citi analysts expect AI capex to hit a whopping $2.8 trillion (£2 trillion) through 2029.

CoreWeave has been an emerging company in the AI boom, as major firms continue to rent space in its data centres to access its ample supply of Nvidia chips.

However, several Wall Street analysts remain concerned about the company's mounting debt, borrowed at high interest rates. They are also worried about CoreWeave's worsening operating income outlook and its risky business model, citing that its heavily concentrated customer base consists of its own competitors. Overall, analysts highlighted that once top tech firms complete building their own data centres and secure an adequate supply of Nvidia chips, they will no longer need compute capacity from CoreWeave.

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