According to a source familiar with the matter, artificial intelligence cloud computing firm CoreWeave, Inc. is investigating the use of financial derivatives as a potential hedge against possible future declines in memory and storage chip prices.

This unconventional move highlights how the AI boom is deeply intertwining cloud service providers with the highly volatile chip market. To secure supply amidst surging demand driven by a boom in AI infrastructure build-out, cloud operators including CoreWeave have entered into long-term agreements with memory and storage chip manufacturers like Micron and SanDisk.

Many of these agreements provide price floor guarantees for suppliers on dynamic random-access memory (DRAM) and storage chips.

The source indicated that CoreWeave executives have held discussions on how to hedge against the risk of inventory devaluation for memory chips that could result from future price drops.

The discussions are still in preliminary stages, and the company has not executed any hedging transactions yet. Options under consideration include put options—contracts that grant the holder the right, but not the obligation, to sell the underlying asset at a predetermined price in the future—along with other possible derivative instruments.