When CoreWeave, the cloud computing company vying to become the first major artificial intelligence start-up to go public, filed paperwork for a public listing earlier this month, it was a mark of optimism in an otherwise rocky market for I.P.O.s.
But now that optimism has faded as the New Jersey-based CoreWeave significantly reduced the size and value of its offering on Thursday. The company is now expected to price its shares at $40 when it begins trading on Friday, according to the company, down from recent estimates in filings that its shares would be priced at $47 to $55 a share.
Initially expected to raise around $4 billion at a $35 billion valuation, the company seeks to raise $1.5 billion in its offering Friday and would be valued at $19 billion.
The reduced offering is a sign of a slumping stock market clouded by uncertainty around inflation and President Trump’s tariffs. And it reflects broader concerns around the development of A.I. in a slowing economy, as stock in Nvidia, the prized chip maker that is an investor in and supplier for CoreWeave, has fallen 7 percent since Wednesday.
“It has been a brutal time for markets in general,” said Samuel Kerr, the head equity capital market analyst at the financial insight firm Mergermarket. “It shows you that there is very little appetite to put forward this kind of risk transaction at the moment.”
While CoreWeave will be the first major A.I. company to go public, it is not a true litmus test for A.I. offerings, which will fall to the industry’s start-up standard bearers like OpenAI and Anthropic, the makers of chatbots popular with millions of users.
CoreWeave also “has a lot of idiosyncrasies that make it a difficult I.P.O. candidate,” Mr. Kerr said, including the huge amount of debt it took on to build new data centers and its unusual background as a cryptocurrency mining firm.
“Using it as a bellwether for all of A.I. is not a particularly intelligent thing to do,” Mr. Kerr added.
CoreWeave was founded as a cryptocurrency mining start-up in 2017 by Michael Intrator, who is now its chief executive; Brian Venturo; and Brannin McBee, three former commodities traders who are now the company’s top executives. Since it started, CoreWeave has built its business around Nvidia graphics processing units, or GPUs, powerful computer chips that can analyze enormous amounts of data.
When crypto prices crashed in 2019, CoreWeave doubled down on stockpiling the powerful chips, buying them in mass from distressed crypto companies. After OpenAI released its chatbot ChatGPT in 2022, CoreWeave shifted to using its chips for A.I. development.
As a public company, CoreWeave will offer a new glimpse into the profitability of cloud computing and the A.I. industry. While its revenue jumped to $1.9 billion last year from $229 million a year earlier, it has yet to turn a profit. It spent nearly a billion dollars last year to finance its debt.
The company is based in a suburban office park in Livingston, N.J., but touts relationships with well-known California companies like Nvidia, which is an investor in CoreWeave, and OpenAI, which recently announced a deal with CoreWeave worth up to $12 billion.
CoreWeave has raised $2.3 billion in venture capital funding and last year was valued in the private markets at $19 billion. Mr. Intrator, Mr. Venturo and Mr. McBee own around 30 percent of the company, with a special class of shares giving them around 80 percent of the voting power.
CoreWeave’s largest investor is the hedge fund Magnetar, which invested $50 million in the young cloud computing start-up in 2021. It owns around a 25 percent stake. Nvidia, which supplies most of CoreWeave’s chips, owns a 4 percent stake.
Morgan Stanley, JPMorgan and Goldman Sachs managed the I.P.O.