CoreWeave closed a $650 million secondary share sale with Cisco joining as investor.

CoreWeave, a startup that rents out Nvidia's artificial intelligence chips to other companies, closed a $650 million secondary share sale on Wednesday. In the transaction, Cisco and Pure Storage invested alongside financial institutions including BlackRock, Coatue, and Fidelity, with existing CoreWeave stakeholders selling shares to outside investors. Bloomberg reported that CoreWeave was targeting a $23 billion valuation for the deal, up from $19 billion in a $1.1 billion investment round announced in May.

The company is competing head-to-head with large cloud infrastructure providers such as Amazon and Google in offering Nvidia's graphics processing units, or GPUs, for AI workloads. CoreWeave received a significant boost last year when Nvidia made an investment, and gained another credential when Microsoft enlisted the company as a third-party cloud provider. CoreWeave co-founder and CEO Mike Intrator told CNBC's "Squawk Box" in July: "We are a company that is one of the few companies in the world that's able to bring on this kind of infrastructure at the scale that's required to actually make a difference."

The surge in investment reflects explosive demand for AI infrastructure following ChatGPT's viral launch in late 2022, which sparked soaring demand for compute power. The following month after Intrator's July interview, Nvidia said its H200 GPUs had become available through CoreWeave, making the startup the first cloud provider to reach general availability with the graphics cards.

CoreWeave has raised $14 billion to date. In May, the company raised $7.5 billion in fresh debt, and in October it announced a $650 million credit line. Last week, bitcoin mining company Core Scientific announced that CoreWeave had signed up for 500 megawatts worth of data center capacity in a deal that could be worth up to $8.7 billion over 12 years.