Artificial intelligence cloud computing company Core Weave borrows Wall Street strategies to hedge memory chip price risks
[] According to a person familiar with the matter, artificial intelligence cloud computing company CoreWeave is exploring the use of financial derivatives as a potential hedge against future declines in memory and storage chip prices. The unusual move highlights how the AI boom has deeply tied cloud service providers to the volatile chip market. To lock in supply as demand surges amid a surge in AI infrastructure buildout, cloud operators including CoreWeave have partnered with (Micron) and ) and other memory and storage chip manufacturers have signed long-term agreements. Many of these agreements provide suppliers with guaranteed price floors for dynamic random access memory (DRAM) and memory chips. According to sources, CoreWeave executives have discussed how to hedge the risk of devaluation of memory chip inventories that may result from future price drops. The source said discussions are at an early stage and the company has not yet executed any hedging operations. Options discussed include put options - contracts that give the holder the right (but not the obligation) to sell an underlying asset at a predetermined price in the future - and other possible derivatives.