Nebius (NBIS 4.04%) and CoreWeave (CRWV +0.85%) both provide cloud-based GPUs for processing artificial intelligence (AI) tasks. Companies can remotely access those cloud-based GPUs for a fee instead of building their own GPU-powered data centers -- which can be cheaper, more flexible, and more scalable than installing on-site hardware.
Nebius and CoreWeave didn't start out as AI-driven cloud-based GPU providers. Nebius was previously known as Yandex, the online search leader in Russia. But as sanctions derailed its expansion plans, it divested its Russian assets, repurposed its data centers for handling AI tasks, and rebranded itself as an AI company. CoreWeave was once an Ethereum mining company, but the crypto crash of 2018 drove it to abandon that business model and repurpose its GPUs to process AI applications instead.
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Nebius and CoreWeave buy their GPUs from Nvidia, which has invested in both companies. Nvidia now owns 0.5% of Nebius and 6.4% of CoreWeave, which suggests it's bullish on the long-term growth potential of their cloud-based GPUs.
Nebius' stock price has surged nearly 520% since it resumed trading under its new ticker on Oct. 21, 2024. CoreWeave's stock has soared about 230% since its IPO this March. Both companies are dazzling the bulls with their explosive growth rates, but which one is the better AI stock?
The differences between Nebius and CoreWeave
Nebius and CoreWeave might seem similar, but their business models are different. Nebius is a "full stack" AI infrastructure company that plugs its cloud-based GPUs into managed services like Kubernetes and PostgreSQL. CoreWeave mainly processes GPU-intensive workloads instead of handling smaller managed services.
NASDAQ: NBIS
Key Data Points
Nebius only owns a single data center in Finland, but it leases additional data centers through colocation deals in Missouri, France, and Iceland. It's building its second first-party data center in New Jersey, and it recently signed another colocation deal in the United Kingdom. CoreWeave operates 33 first-party data centers across the U.S. and Europe. That's up from 15 centers in 2024, 14 centers in 2023, and just three centers in 2022.
NASDAQ: CRWV
Key Data Points
Both companies have close ties to Microsoft. Nebius signed a five-year, $17.4 billion AI infrastructure deal with Microsoft this September. CoreWeave generates around 70% of its revenue from Microsoft, and it recently increased the value of its existing contracts with OpenAI (Microsoft's top AI partner) by $6.5 billion to $22.4 billion.
Which company is growing faster?
In 2024, Nebius' revenue soared 462% to $118 million. But its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) came in at negative $266 million. CoreWeave's revenue skyrocketed 738% to $1.92 billion in 2024, while its adjusted EBITDA surged 1,073% to $1.22 billion. However, both companies are still deeply unprofitable on a generally accepted accounting principles (GAAP) basis -- which includes all of the depreciation costs for their servers and the amortization of their rising debt.
That's because it costs a lot of money to buy Nvidia's top-tier GPUs, build new data centers, and keep them running. Economies of scale might gradually kick in and dilute those high operating expenses, but it could take years for both companies to break even on a GAAP basis. Until that happens, they'll keep diluting their own shares with secondary offerings and issuing more debt.
From 2024 to 2027, analysts expect Nebius' revenue to grow at a CAGR of 233% to $4.34 billion. They expect its adjusted EBITDA to turn positive in 2026 and jump 186% to $852 million in 2027. That expansion should be driven by its data center openings, its new deal with Microsoft, and its growth in new customers as the AI boom continues.
During the same three-year period, analysts expect CoreWeave's revenue to grow at a CAGR of 112% to $18.1 billion as its adjusted EBITDA rises at a CAGR of 120% to $13.0 billion. That expansion should be fueled by its partnerships with Microsoft and OpenAI, as well as additional acquisitions to compensate for the recent termination of its $9 billion, all-stock bid for Core Scientific -- which would have significantly increased its data center capacity.
Which stock is more reasonably valued?
Nebius is growing faster, but that isn't surprising because it's a much smaller company. With a market cap of $31.4 billion, it's valued at 7 times its projected sales for 2027. CoreWeave, with a market cap of $72.5 billion, trades at just 4 times its estimated sales for 2027.
Both of these stocks are highly speculative, but CoreWeave's superior scale, clearer goals for the future, and lower valuation make it a better AI play than Nebius right now. As for Nebius, investors should probably wait for it to open a few more data centers before pulling the trigger.
