Nvidia and CoreWeave Strike a Major Deal. Am I Buying It?
Here's why and when I'd be willing to take on CRWV shares, my take on the collaboration and the chart.
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Nvidia (NVDA) has reportedly invested $2 billion in CoreWeave (CRWV) and is expanding the duo's collaborative effort to accelerate the buildout of over five gigawatts of AI factories by calendar year 2030. For those new to the current environment, CoreWeave primarily builds and rents out data centers. These data centers largely run on Nvidia GPUs and are used for training models and running immense AI-focused workloads.
Nvidia had already been heavily invested in CoreWeave. Readers may recall that this past September CoreWeave received an order worth at least $6.3 billion from Nvidia and the elite chip designer had an obligation to purchase any "residual unsold capacity" through April 2032.
The CEOs
- Nvidia CEO Jensen Huang said, “CoreWeave’s deep AI factory expertise, platform software, and unmatched execution velocity are recognized across the industry. Together, we’re racing to meet extraordinary demand for NVIDIA AI factories—the foundation of the AI industrial revolution.”
- As did CoreWeave CEO Michael Intrator, "NVIDIA is the leading and most requested computing platform at every phase of AI – from pre-training to post-training – and Blackwell provides the lowest cost architecture for inference. This expanded collaboration underscores the strength of demand we are seeing across our customer base and the broader market signals as AI systems move into large-scale production."
The Plan Is Simple
The plan is to build AI factories together, developed and operated by CoreWeave and using Nvidia's technology to meet seemingly insatiable customer demand. The two companies seem to be strategically set up to deploy multiple generations of Nvidia infrastructure architecture across the CoreWeave universe.
The Breakout?
Readers will see that CRWV is coming out of a double bottom pattern of bullish reversal that ran from late October into the new year.
There is another one of those patterns visible last summer. Both worked for the bulls like a couple of charms. Readers will secondarily see a closing pennant that I drew up in gray for you. This pattern also may have produced this morning's news inspired breakout. The stock is up more than 15% as I write.
Looking at the indicators, despite already being up significantly on Monday morning, relative strength is quite robust, but not yet overbought. In addition, all three components of the daily moving average convergence divergence are set up quite bullishly without being the least bit extended.
I see the 200-day simple moving average, which is fairly new, as my pivot. Take and hold that spot, I will see this name as a buy. Fail here and definitely not. Hence, I am more willing to take on these shares at a higher price after I see the behavior around pivot than I would be to get a lower price now facing that uncertainty. Could be a good situation to get long a bull-call spread expiring in mid- to late February (ahead of earnings) and sell puts at lower strike prices to finance the spread.
At the time of publication, Guilfoyle was long NVDA equity.
