Meta Signs $14B Deal With AI Cloud Firm CoreWeave

CoreWeave has secured a cloud computing contract worth as much as $14.2B with Meta, the latest in a string of massive Big Tech agreements inked by the neocloud provider as it rapidly expands its data center portfolio. 

Under the deal, CoreWeave will provide Meta Platforms with artificial intelligence computing as a service through December 2031. Meta holds an option to expand the agreement through 2032 to gain access to more computing capacity. First reported by Bloomberg, the deal specifically provides Meta with processing from Nvidia’s most recent line of graphics processing units, branded as Blackwell. 

For Meta, the deal is part of an unprecedented spending spree on building and leasing AI infrastructure that could push into the hundreds of billions of dollars. For CoreWeave, the deal is its largest agreement with Meta by far, adding a critical new revenue source as the company pursues its own aggressive expansion of its data center infrastructure. 

"They loved our infrastructure in earlier contracts and came back for more," CoreWeave CEO Michael Intrator said, according to Bloomberg. 

New Jersey-based CoreWeave is the largest player in the fast-growing ecosystem of neocloud firms — AI-focused cloud providers that offer on-demand access to the GPU computing critical for AI. The deal with Meta is the third multibillion-dollar contract CoreWeave has landed in recent weeks, a trio of deals valued at close to $30B.

Last week, CoreWeave expanded its cloud services agreement with OpenAI by $6.5B, increasing the ChatGPT creator's total planned spending with CoreWeave to $22.4B. This follows a $6.3B commitment announced earlier in September by GPU giant Nvidia, which will purchase any of CoreWeave’s unsold compute capacity through 2032.

CoreWeave is already rapidly expanding its data center portfolio to deliver the computing power it is promising. The company, which leases the bulk of its data center inventory, finished the last quarter with 470 megawatts of operational capacity, with plans to gain an additional 900 MW of capacity by the end of this year, according to its earnings statement.  

In Lancaster, Pennsylvania, CoreWeave is developing a $6B data center campus that could ultimately reach 300 MW. CoreWeave landed $4B in funding for the project in August, with asset manager Blue Owl Capital and affiliates of Chirisa Technology Parks and Machine Investment Group committing to partner on the development effort. 

That same month, CoreWeave agreed to lease 150 MW at a site being developed by Applied Digital in North Dakota and acquired part of a northern New Jersey tech campus where it already operates a data center. In September, CoreWeave announced it would invest $3.4B to expand its data center footprint in the UK.

Amid this development push, CoreWeave’s deal with Meta marks a major milestone in its concurrent efforts to diversify its customer base.

The firm went public in March, but investors gave its initial public offering a lukewarm reception, partly due to concerns that a single customer, Microsoft, accounted for the majority of its revenue. As of CoreWeave’s most recent quarterly filing, 70% of the company’s revenue comes from Microsoft. 

Investors appeared to welcome the news of a major contract with a new hyperscale customer, with shares of CoreWeave jumping more than 15% following the announcement. 

"This is clearly a step in the right direction for diversification," Intrator told Bloomberg.

For Meta, the CoreWeave deal comes as the Facebook and Instagram parent is ramping up its investment in AI computing power.

CEO Mark Zuckerberg said in July it plans to spend hundreds of billions of dollars building out new AI infrastructure. Meta already pledged up to $65B in data center capital expenditures this year as the company attempts to keep up with rivals like OpenAI and its Stargate data center development initiative.

The company will build “several” multigigawatt data center clusters in the coming years, according to Zuckerberg, in addition to the two AI megacampuses it already has in development. The first of those new campuses, an Ohio facility with more than a gigawatt of capacity, is slated to come online next year. Meta is also building a massive campus in Louisiana that could scale up to more than 5 GW.

Meta, like the other hyperscale AI players, has also previously acquired AI computing capacity through partnerships similar to this week’s deal with CoreWeave. In August, Meta signed a $10B cloud deal with Google for access to AI computing capacity for six years. Oracle is also reportedly in discussions with Meta regarding an AI cloud deal valued at $20B. 

But hyperscalers are increasingly turning to neocloud firms like CoreWeave for on-demand AI computing. Neoclouds have emerged as the fastest-growing niche within the data center landscape, with the sector’s revenues nearly doubling on an annual basis, according to JLL. Beyond simply contracting computing power, tech giants have served as financial sponsors to help these younger cloud firms expand their data center footprints. 

Some industry analysts view these increasingly common relationships between hyperscalers and neoclouds with skepticism.

Experts have raised concerns that some of these partnerships are, at least in part, a way for tech giants to fund new data center build-out without increasing capex amid rising investor unease at the scale of AI infrastructure spending — and to decrease their risk exposure should demand for AI computing power slow in the months ahead. 

Futurum Group tech analyst David Nicholson told Yahoo Finance on Tuesday that this kind of “odd market dynamic” could be driving Meta’s CoreWeave deal. 

Otherwise, he said, it is hard to understand how renting GPUs from CoreWeave is preferable for Meta compared to deploying them in its own data centers.

"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.