According to a source 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 memory chip prices. This unusual move highlights how the AI boom is deeply tying cloud service providers to the volatile chip market. Cloud operators, including CoreWeave, have signed long-term agreements with memory and memory chip manufacturers such as Micron and SanDisk to lock in supply at a time when demand is surging due to a surge in AI infrastructure construction. Many of these agreements provide suppliers with lower price guarantees for dynamic random access memories and memory chips. According to sources, CoreWeave executives have discussed how to hedge against the risk of memory chip inventory depreciation that may result from future price drops. The source said discussions are still in the early stages and the company has yet to carry out any hedging operations. The options discussed included put options — contracts that give the holder the right to sell the underlying asset at a predetermined price in the future — and other possible derivatives.

According to a source 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 memory chip prices. This unusual move highlights how the AI boom is deeply tying cloud service providers to the volatile chip market. Cloud operators, including CoreWeave, have signed long-term agreements with memory and memory chip manufacturers such as Micron and SanDisk to lock in supply at a time when demand is surging due to a surge in AI infrastructure construction. Many of these agreements provide suppliers with lower price guarantees for dynamic random access memories and memory chips. According to sources, CoreWeave executives have discussed how to hedge against the risk of memory chip inventory depreciation that may result from future price drops. The source said discussions are still in the early stages and the company has yet to carry out any hedging operations. The options discussed included put options — contracts that give the holder the right to sell the underlying asset at a predetermined price in the future — and other possible derivatives.