Why CoreWeave Rallied 46.5% in June

Shares of artificial intelligence (AI) neocloud CoreWeave (NASDAQ: CRWV) rocketed 46.5% in June, according to data from S&P Global Market Intelligence.

CoreWeave went public in March under a cloud of scrutiny and fears over tariffs. However, it has since become an AI darling, skyrocketing not only in May on the back of an incremental Nvidia (NASDAQ: NVDA) investment, but also in June.

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June's gains appeared to come from increasing optimism over AI-related growth, with CoreWeave publishing impressive leading benchmarks running Nvidia's latest Blackwell chips.

Image source: Getty Images.

The largest and fastest GB200 NVL72 cluster in the industry

In early June, CoreWeave submitted MLPerf Training v5.0 benchmarks for its GB200 NVL72 cluster, in collaboration with Nvidia and IBM. CoreWeave's submission used 2,496 Nvidia GPUs running on CoreWeave's AI-optimized infrastructure. That infrastructure includes CoreWeave's proprietary software and middleware innovations such as SUNK, which allows customers to use a combination of popular AI training programming languages instead of having to choose just one. CoreWeave's Tensorizer software also routes data to the closest possible GPU, resulting in faster training times.

CoreWeave said its training cluster was 34 times larger than the only other cluster submitted for the same benchmark from a major cloud provider, underscoring CoreWeave's current advantage of deploying huge Nvidia clusters quickly. The company noted its infrastructure ran the large 405 billion-parameter Llama 3.1 model in just 27.3 minutes, more than twice as fast as other submissions.

CoreWeave may have an advantage due to Nvidia's investment, but also is risky

CoreWeave may be getting a preferred allocation of Nvidia chips before other major clouds, due to Nvidia's investment in CoreWeave, as well as all major clouds now pursuing their own AI training and inference ASICs.

So CoreWeave appears to have a time-to-market advantage versus others, which may make CoreWeave attractive to AI labs needing the latest and greatest Nvidia chips as quickly as possible in large numbers. For instance, OpenAI, thought to be the leading AI lab today, inked an $11.9 billion deal with CoreWeave in March.

That being said, CoreWeave is inherently at the mercy of Nvidia, which is both a supplier, investor, and customer, in a somewhat circular relationship. While the arrangement seems to be working for now, there is always the danger that if Nvidia ever gets a big competitive threat, things could get complicated for CoreWeave -- especially at its current elevated valuation.

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Billy Duberstein and/or his clients has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends International Business Machines and Nvidia. The Motley Fool has a disclosure policy.