CoreWeave NASDAQ:CRWV is reportedly exploring financial derivatives to hedge against a future drop in memory and storage chip prices, according to a person familiar with the matter. The AI-focused cloud provider, which rents out GPU computing power for training and running AI models, has signed long-term supply deals with chipmakers including Micron NASDAQ:MU and SanDisk NASDAQ:SNDK to lock in scarce memory. Many of those contracts set price floors, which protects the suppliers but leaves CoreWeave paying above-market rates if chip prices later fall. CoreWeave shares are up 0.84% in premarket.
Executives have discussed instruments including put options, which act like insurance by gaining value as an underlying asset falls, to offset a decline in memory-chip stocks. The discussions are early and CoreWeave has not executed any hedges. Airlines and energy producers run similar hedges to minimize the impact of swinging fuel and oil prices.
The backdrop is a memory market that has run hot. Prices for DRAM and flash storage have spiked in recent months, and the industry has historically turned cyclical once new supply arrives. SK Hynix NASDAQ:SKHY and Micron expect fully ramped new manufacturing capacity in early 2028.