Microsoft has inked a deal potentially worth billions with Nvidia-backed startup CoreWeave, securing cloud computing infrastructure that will amplify its AI computing power. This agreement is part of Microsoft’s ambitious strategy to enhance its AI services amid the industry’s ongoing boom.

CoreWeave, an innovative provider of simplified access to Nvidia’s graphics processing units (GPUs), recently announced it had raised $200 million in funding. Its GPUs, renowned for their superior performance in running AI models, have positioned the startup as an attractive solution for Microsoft’s computing needs.

Microsoft’s agreement with CoreWeave is expected to span several years and could be worth billions, according to insiders. The strategic partnership comes as the tech giant seeks to bolster computing capabilities for its OpenAI project, responsible for the ChatGPT chatbot that has gone viral. OpenAI currently relies heavily on Microsoft’s Azure cloud infrastructure for its considerable compute demands.

Generative AI has become increasingly sought after since OpenAI’s ChatGPT captured public attention with its ability to produce sophisticated responses from human input. This sparked a rush of interest in the technology from various companies, including Google, while Microsoft has been diligently deploying chatbots for its own services, such as Bing and Windows.

With the surge in demand for its infrastructure, Microsoft’s deal with CoreWeave represents a strategic move to access more of Nvidia’s GPUs. Despite declining to comment on the deal, CoreWeave’s CEO, Michael Intrator, stated that revenue has significantly multiplied from 2022 to 2023.

CoreWeave, founded in 2017 and currently employing 160 people, is based in Roseland, New Jersey. The startup recently announced its funding extension from hedge fund Magnetar Capital as a continuation of a $221 million round in April, during which Nvidia invested $100 million.

The startup’s claims of offering computing power that is “80% less expensive than legacy cloud providers” likely factored into Microsoft’s decision. CoreWeave offers Nvidia’s A100 GPUs, which developers can access through Amazon, Google, and Microsoft clouds. However, CoreWeave also has a more cost-effective option with Nvidia A40 GPUs, designed for visual computing.

Nvidia’s stock price has surged 170% this year, with the company’s market cap briefly exceeding $1 trillion for the first time. Much of Nvidia’s future growth is anticipated to be driven by the data center sector, largely due to the escalating demand for generative AI and large language models.

With this multi-billion dollar partnership, Microsoft is set to significantly enhance its AI capabilities, further solidifying its position in the AI industry and ensuring OpenAI’s continued growth.