Microsoft (MSFT, Financials) plans to invest $10 billion in CoreWeave, a cloud computing startup specializing in artificial intelligence infrastructure, over the next six years.
This calculated action seeks to improve Microsoft’s artificial intelligence capacity and guarantee the necessary resources for running sophisticated AI systems.
Due mostly to the new Microsoft contract, CoreWeave, which offers cloud services renting access to Nvidia (NVDA, Financials) AI chips, predicts its revenue will be around $8 billion next year. CoreWeave expects revenue of roughly $2 billion in 2024 and operating profitability.
This investment fits Microsoft’s more general plan to increase its capacity to run advanced AI models using alliances, therefore strengthening its AI infrastructure. With CoreWeave’s AI-specific infrastructure, Microsoft can seek greater high-performance computing capabilities, placing CoreWeave as a rival to Alphabet (GOOGL, Financials) and Amazon (AMZN, Financials) in the cloud services market.
This cooperation could change the competitiveness in the cloud sector by stressing the requirement of specialized artificial intelligence infrastructure to satisfy rising computing needs.
Besides the CoreWeave investment, Microsoft has started several projects to strengthen its artificial intelligence and cloud solutions.
To satisfy the rising demand for artificial intelligence and cloud services, Microsoft has greatly raised capital expendituresreaching $20 billion in the latest quarter. This covers expenditures on data centers and infrastructure connected to artificial intelligence to enable tools driven by Azure and other services.
This article first appeared on GuruFocus.