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Cisco (CSCO) Invests in AI Cloud Firm CoreWeave, Valued at $23 Billion
CSCOCisco Systems(CSCO) Gurufocus·2024-10-04 02:50

Company Overview - Cisco Systems has agreed to invest in CoreWeave, a prominent AI startup valued at 23billion[1]−CoreWeaveisplanningasecondarytransactionallowingexistingshareholderstosell23 billion [1] - CoreWeave is planning a secondary transaction allowing existing shareholders to sell 400 to 500millioninshares[1]−CoreWeaveisconsideringanIPOasearlyasnextyear[1]−CoreWeave′sinvestorsincludeNvidia,MagnetarCapital,CoatueManagement,JaneStreet,andFidelity[1]−CoreWeaveisanearlyadopterofNvidia′sdatacentergraphicchipsandisbuildingdatacentersbasedonthesechipstosupportAI−relatedcomputingtasks[1]IndustryDynamics−Ciscoaimstoensureamajorroleforitstechnologyintherapidlyexpandingdatacentersector,whichitbelieveswillboostdemandforitsnetworkingproducts[2]−CoreWeaveinitiallystartedasacryptocurrencyminingcompanybuttransitionedtocloudcomputingservicesbyleveraginglargepurchasesofNvidiagraphiccards,strengtheningitsrelationshipwithNvidiaovertime[2]−Nvidia′ssupportforCoreWeavecoulddisruptthecurrentcloudcomputingmarketdominatedbygiantslikeAmazonAWS,MicrosoftAzure,andGoogleCloud,reflectingNvidia′spotentialtoinfluencethe500 million in shares [1] - CoreWeave is considering an IPO as early as next year [1] - CoreWeave's investors include Nvidia, Magnetar Capital, Coatue Management, Jane Street, and Fidelity [1] - CoreWeave is an early adopter of Nvidia's data center graphic chips and is building data centers based on these chips to support AI-related computing tasks [1] Industry Dynamics - Cisco aims to ensure a major role for its technology in the rapidly expanding data center sector, which it believes will boost demand for its networking products [2] - CoreWeave initially started as a cryptocurrency mining company but transitioned to cloud computing services by leveraging large purchases of Nvidia graphic cards, strengthening its relationship with Nvidia over time [2] - Nvidia's support for CoreWeave could disrupt the current cloud computing market dominated by giants like Amazon AWS, Microsoft Azure, and Google Cloud, reflecting Nvidia's potential to influence the 2 trillion market [2]