Shares of artificial intelligence (AI) neocloud Nebius Group (NBIS 8.49%) rocketed 50.6% in June, according to data from S&P Global Market Intelligence.
Neoclouds and other AI-related stocks had great months in June in general, as the sector not only recovered from the April "Liberation Day" plunge, but also saw continued bullish data and statements from major tech CEOs on the growth of AI.
In addition, one analyst wrote a note comparing Nebius to one of its main neocloud rivals, CoreWeave (CRWV 7.57%), preferring Nebius over its better-known competitor.
NASDAQ: NBIS
Key Data Points
Arete gives Nebius the thumbs-up
On June 5, analyst Andrew Beale of boutique sell-side analyst firm Arete Research published a note, giving Nebius a "Buy" rating, with an $84 price target. In contrast, the analyst gave CoreWeave a "Neutral" rating. Beale concludes that both stocks will trade according to how short of graphics processing unit (GPU) supply the world is at the moment, but that he preferred Nebius due to its lower "embedded valuation" relative to CoreWeave.
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Nebius actually trades at a higher valuation than CoreWeave based on this year's revenue estimates, with CoreWeave trading at about 14.5 times this year's revenue estimates of $5 billion. On the other hand, Nebius trades around 22 times 2025 revenue estimates of $526 million. However, Nebius has lots of net cash on its balance sheet of about $1.44 billion, while CoreWeave has about $6.2 billion in net debt. Nebius is also much earlier in its growth trajectory.
Nebius is unique
Like CoreWeave, Nebius is backed by Nvidia (NVDA 1.40%), which participated in an oversubscribed private placement in Nebius in December. Like CoreWeave, Nebius may have all the same advantages, including a preferred GPU allocation over other cloud providers, due to Nvidia's investment. However, both stocks also have the disadvantage of being highly dependent on Nvidia and Nvidia's competitive position in the industry.
Nebius differentiates itself by building its own data center server infrastructure, whereas CoreWeave tends to buy servers from others, and opts to differentiate itself through its in-house software and middleware.
It's hard to say at this point which is the better pick, given how similar their positioning is and how early we are in the AI infrastructure build-out. However, if one believes in an Nvidia-dominated AI future and that AI spending will continue to grow by leaps and bounds, both Nebius and CoreWeave are worth consideration.
