A hot IPO stock more than triples in its first few months on the market. A former high-flying stock rebounds from a steep sell-off to become the world's first $4 trillion company. Those are the stories for CoreWeave (CRWV +0.85%) and Nvidia (NVDA 3.17%) this year.
Investors who saw the potential in these two artificial intelligence (AI) stocks have reaped tremendous rewards. But which is the better pick to buy now?
Image source: Getty Images.
Two growth superstars
Anyone who has followed Nvidia for a while has become accustomed to sizzling growth. The graphics processing unit (GPU) maker's momentum continues. In the first quarter of fiscal 2026, Nvidia reported revenue of $44.1 billion, up 69% year over year.
The main negative of Nvidia's Q1 results was that its gross margin tumbled nearly 18% year over year. As a result, its earnings increased by 26%, a much slower pace than revenue. That's still an impressive jump, though.
There should be good news ahead for Nvidia. Its new Blackwell chips are selling hand over fist. The company expects increased profitability for these GPUs to drive gross margins higher. In addition, the U.S. government is allowing Nvidia to sell its H20 GPUs to China. The previous restriction against such sales led to a $4.5 billion charge that weighed on gross margins.
NASDAQ: NVDA
Key Data Points
Meanwhile, CoreWeave reported revenue of $981.6 million in its first quarter as a publicly traded company, reflecting jaw-dropping, year-over-year growth of 420%. The demand for CoreWeave's AI cloud infrastructure is so great that the company is having to scramble to keep up with it.
CoreWeave's revenue backlog stood at $25.9 billion at the end of Q1. This figure included $11.2 billion from the company's deal with ChatGPT creator OpenAI.
However, CoreWeave remains unprofitable. And the capital spending required to expand capacity to support soaring demand is causing the company's bottom line to worsen. The picture looks better with adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA), though. CoreWeave's adjusted EBITDA jumped 477% year over year in Q1 to $606 million.
NASDAQ: CRWV
Key Data Points
The valuation conundrum
Typically, the biggest knock against sizzling growth stocks is that their valuations can sometimes be too hot to handle. At first glance, this might seem to be true with both CoreWeave and Nvidia.
Because CoreWeave continues to post net losses, earnings-based valuation metrics can't be used with its stock. The company's price-to-sales (P/S) ratio of over 21 looks expensive on the surface. However, if CoreWeave continues to grow revenue anywhere close to its current pace, that multiple will be much more reasonable soon, even with the stock rising further.
Nvidia's forward price-to-earnings (P/E) ratio of 38.6 is the highest multiple of any "Magnificent Seven" stock other than Tesla. Its P/S ratio of 28.7 is even higher than CoreWeave's. By most standards, Nvidia's shares are priced at an absurdly high premium.
Again, though, those valuation metrics should be assessed with growth prospects in mind. Nvidia's valuation won't look too daunting if the demand for the company's GPUs remains high.
Better AI stock?
I think Nvidia has the better AI business between these two. It's highly profitable. Nvidia's GPUs remain the gold standard in training and deploying AI models. Although the company faces competition, its continual innovation is keeping its chips well ahead of the pack.
That said, I like CoreWeave's business model. Its GPU pricing beats big rivals such as Amazon Web Services, Microsoft Azure, and Alphabet's Google Cloud. CoreWeave has carved out a niche for itself in the cloud market that's appealing to organizations scrambling to build AI applications.
If AI demand slows, CoreWeave will be much more at risk than Nvidia. If you're worried about this possibility, Nvidia is the better stock to buy. But what if AI demand continues to grow? I believe CoreWeave has greater upside potential than Nvidia.
The answer, therefore, to which of these two AI stocks is the better pick to buy right now depends on your take on what's going to happen with AI demand. I'm optimistic, which means I expect CoreWeave has more room to run than Nvidia over the next couple of years.
