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By Jaspreet Singh
(Reuters) -CoreWeave reversed course to gain around 3% on Thursday after the AI cloud firm announced an expanded deal with OpenAI of up to $4 billion, lifting investor sentiment that had taken a hit from the company's hefty capital spending plans.
OpenAI has committed to pay the Nvidia-backed data center operator through April 2029, CoreWeave said in a regulatory filing.
CoreWeave executives had said on a post-earnings call on Wednesday that they had signed an expansion deal without naming the company. They also added CoreWeave had signed on a new hyperscaler as a client, without offering more details.
OpenAI and CoreWeave already have a five-year contract worth $11.9 billion in place, under which the New Jersey-based firm provides the ChatGPT maker cloud computing capacity. The deal also gave OpenAI a stake in CoreWeave.
While CoreWeave did not name its hyperscaler client, analysts at Morgan Stanley and MoffettNathanson noted it could be Google-parent Alphabet. A media report in April had said Google was in talks to rent Nvidia chips from CoreWeave.
CoreWeave shares slumped as much as 9.1% earlier after it forecast its annual capital expenditure would be about four times higher than the predicted revenue in 2025. The projection came in CoreWeave's first earnings since going public in March.
Companies are continuing to plough billions of dollars into artificial intelligence even as investor scrutiny has sharpened after the launch of DeepSeek's low-cost AI models.
"Hyperscalers are direct competitors to CoreWeave and are only temporarily using CoreWeave for overflow capacity. They will likely go away once they have built out enough of their own data centers," D.A. Davidson & Co analyst Gil Luria said.
CoreWeave did not immediately respond to a Reuters request seeking confirmation on the new client.
As of last close, CoreWeave's stock surged 69% from the offer price in its March IPO. At least seven brokerages have raised their price targets on the stock to between $50 and $80.
(Reporting by Jaspreet Singh in Bengaluru; Editing by Krishna Chandra Eluri)