CoreWeave vs. Global Crossing: Lessons from the Dot-Com Era for AI Investors

The recent initial public offering (IPO) of CoreWeave, a cloud computing provider specializing in AI infrastructure, invites comparisons to Global Crossing's trajectory during the dot-com era. Both companies capitalized on burgeoning technological trends, yet their divergent outcomes offer valuable insights for investors navigating today's AI landscape.​

Parallels Between CoreWeave and Global Crossing

In the late 1990s, Global Crossing invested heavily in undersea fiber-optic networks, anticipating an internet-driven surge in data transmission. Similarly, CoreWeave has amassed substantial GPU resources to meet the escalating demand for AI computation. Both firms sought to monetize infrastructure essential to emerging technologies, positioning themselves as pivotal players in their respective domains.​

Divergent Financial Trajectories

Global Crossing's IPO in August 1998 raised $399 million at $19 per share, with shares surging 34% on the first trading day, reflecting investor enthusiasm. However, the anticipated demand failed to materialize swiftly, leading to overcapacity and financial instability. By January 2002, the company filed for bankruptcy, burdened by $12.4 billion in debt. ​

In contrast, CoreWeave's March 2025 IPO was more subdued. Initially aiming to raise $2.7 billion with shares priced between $47 and $55, the offering was scaled back to $1.5 billion at $40 per share. The stock experienced a 6% decline before stabilizing at its opening price. Despite this tepid debut, CoreWeave reported an eightfold revenue increase to $1.9 billion in the previous year and secured a five-year, $11.9 billion contract with OpenAI, indicating robust demand for its services. ​

Investor Considerations

While CoreWeave's growth metrics are compelling, investors should exercise caution. The company's reliance on major clients like Microsoft, which accounted for over 60% of its 2024 revenue, poses a concentration risk. Additionally, CoreWeave carries approximately $8 billion in debt, raising concerns about its financial flexibility. These factors echo Global Crossing's vulnerabilities, where heavy debt and overreliance on anticipated demand led to its downfall.​

Conclusion

CoreWeave's IPO underscores the importance of prudent investment strategies in rapidly evolving tech sectors. While the AI industry's potential is undeniable, historical precedents like Global Crossing serve as cautionary tales. Investors should conduct thorough due diligence, assess client diversification, and evaluate debt levels to navigate the complexities inherent in tech infrastructure investments.