CoreWeave NASDAQ:CRWV is exploring derivatives to protect itself against a future drop in memory and storage chip prices, according to Reuters.
The AI cloud provider has signed long-term supply agreements with memory companies including Micron NASDAQ:MU and SanDisk NASDAQ:SNDK to secure chips during the current shortage. Many contracts include price floors, which help suppliers but could leave CoreWeave paying above-market prices if memory costs fall.
CoreWeave rents GPU-powered cloud infrastructure to companies building and running artificial intelligence models. Its rapid expansion has made access to memory, storage and advanced computing equipment a key cost risk.
Executives have reportedly discussed put options and other derivatives that could offset losses tied to falling memory-chip prices, although no hedges have been executed.
The concern is cyclical. Memory prices often drop once new manufacturing capacity comes online, and suppliers including Micron and SK Hynix expect major capacity additions to ramp by early 2028.