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Greetings! In just three months, CoreWeave has gone from an iffy IPO candidate to a financial monster gobbling up rivals. That’s what a 300% stock rally can do. CoreWeave’s $9 billion bid, announced Monday, for its rival in the artificial data center business, Core Scientific, has far more significance than just a flashy deal. It also shows the dominance of artificial intelligence in all parts of tech and the crazy valuations that are making investors nervous. And it demonstrates how AI’s astounding demand for cash is leading to financial strategies that are unusual in tech. CoreWeave came to the stock market with $8 billion in debt and about $15 billion in lease obligations. That would normally be a red flag, especially in a fairly young industry. Instead, investors saw it as a smart strategy to get ahead of competitors and as a levered bet on a fast-growing industry. CoreWeave also helped pioneer the idea of borrowing against the AI computer chips that power its data centers. To its credit, CoreWeave has smartly grown its business, diversified its customer base and positioned itself as a go-to company in the AI data center business. Still, the rally in its shares, led by mostly small, fast-trading investors, pushed the stock higher than even CoreWeave’s solid fundamentals warranted, as Cory has previously reported. That has turned the stock into a valuable currency, enabling the company to pay more than $20 a share for Core Scientific. Last year, CoreWeave offered $5.75 a share for the company, which rebuffed the offer. Many stock market darlings, including Tesla, have used their inflated stocks to do deals or raise cheap cash. CoreWeave’s acquisition has the added benefit of wiping away $10 billion in lease obligations it had agreed to pay Core Scientific for use of its data centers (in addition to competing with Core Scientific, CoreWeave is also a customer of the company). Leases are effectively debt. The most telling reaction to the deal came from Core Scientific’s shareholders. The company’s stock fell nearly a quarter when the market opened and was down more than 17% at the close. The deal is forcing investors to give up their shares in a fast-growing company that, among other things, was going to get $10 billion in hard cash from CoreWeave in the coming years. Now, Core Scientific’s investors will be holding shares in a meme stock whose value has become disconnected from its business of providing computing power for AI. And that business, with the risk of weakening growth, big cash burn and the prospect of being undercut by models requiring a fraction of the computing power, was already a high-wire act. For Core Scientific investors, getting a bunch of CoreWeave stock isn’t likely to help them sleep much better at night. Time to buckle up once again, Tesla shareholders. Elon Musk’s declaration on Saturday that he plans to form the America Party to provide an alternative to the Republican and Democratic parties rattled Tesla investors, who sent its shares down almost 7% on Monday. Many of those shareholders had welcomed Musk’s decision in recent months to turn his attention back to running the electric vehicle maker and away from politics. But Musk’s bid to form a new U.S. political party isn’t exactly a reassuring sign that the billionaire is going to truly buckle down to work on his businesses. Starting a new party is a long-shot bid, one that is already reigniting tensions with President Donald Trump, who said Musk has gone “completely ‘off the rails’” in a Sunday post on Truth Social. Musk has plenty of serious challenges to deal with at Tesla, including its new robotaxi service and the development of its Optimus robot. Understandably, Tesla investors seem to be wondering whether those or the America Party will be his top priorities. • Epic Games settled an antitrust lawsuit against Samsung over allegations that the smartphone maker conspired with Google to block rival app stores on Android phones. • Meta Platforms has hired Apple’s top engineer and manager in charge of AI models, Ruoming Pang, Bloomberg reported. AI Agenda by Stephanie Palazzolo separates hype from reality and explains how AI is transforming industries. The 4x/week newsletter details the innovation and disruption happening in AI, from the AI startup funding frenzy to the major technological breakthroughs that will set the agenda for decades to come. Sign up today. | 
