CoreWeave deal turns $50 million into $12.5 billion — hedge fund strikes AI gold

Magnetar Financial, a hedge fund once famous for shorting subprime debt in 2008, has quietly become one of the biggest winners in the AI boom. The hedge fund invested $50 million in CoreWeave Inc. (NASDAQ:CRWV), and this small bet has now grown into a $12.5 billion stake. This is almost 72% of Magnetar’s $20.5 billion portfolio. The investment helped the fund earn a 145% gain in just one quarter.

CoreWeave began as an Ethereum miner storing Nvidia GPUs. Those same GPUs are now used in data centers that train the largest AI models in the world. Magnetar first invested in CoreWeave through structured loans. In 2024, Magnetar and Blackstone led a $7.5 billion loan to CoreWeave, which was one of the largest private debt deals ever.

CoreWeave stock growth

When CoreWeave went public in March 2025, Magnetar’s convertible notes turned into a huge equity gain. By September 30, Magnetar held 91.4 million shares, or about 23% of CoreWeave, even after selling roughly 4.4 million shares. The partial sale alone gave Magnetar a 247% profit. CoreWeave stock has risen more than 220% in 2025 so far.


Magnetar is normally a hedge fund focused on credit arbitrage and relative value, but this all-in bet on a single AI company has surprised Wall Street. Some investors are nervous because it feels more like venture capital than a traditional hedge fund move, but the profits are huge.

In 2008, the “Magnetar trade” profited from a housing crash. In 2025, Magnetar is profiting from the rise of AI. “Timing is still everything,” as per the report by Benzinga. Experts say that to build wealth, it is important not to rely on just one stock. A good portfolio puts money in different kinds of investments like real estate, fixed-income, precious metals, retirement accounts, and to reduce risk and get steady returns.

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FAQs

Q1. How did Magnetar turn $50 million into $12.5 billion?

Magnetar invested $50 million in CoreWeave, and its convertible notes grew into a $12.5 billion stake after CoreWeave went public.

Q2. Why is CoreWeave important in AI?

CoreWeave runs GPUs that power data centers training the world’s biggest AI models, making it a key player in AI growth.