When companies generate excess profit, it's typical for them to allocate capital to initiatives in sales and marketing, product development, or additional hiring. From time to time, however, businesses will make investments in other companies -- acquiring an equity stake in the process.
According to Nvidia's (NVDA +0.99%) most recent 13F filing, the chip powerhouse holds shares in the following public companies: Applied Digital, Arm Holdings, Nebius Group, Recursion Pharmaceuticals, WeRide, and CoreWeave (CRWV +3.49%).
Since going public earlier this year, CoreWeave's share price has soared by 110%. While this handily outperforms the S&P 500 and Nasdaq Composite, CoreWeave stock is trading more than 50% below its prior highs.
Let's unpack CoreWeave's business model and explore why the company is going to be an important player in the artificial intelligence (AI) infrastructure era. From there, I'll analyze CoreWeave's valuation and make the case for why the stock looks like a great buy heading into 2026.
NASDAQ: CRWV
Key Data Points
What does CoreWeave do, and why is it important?
CoreWeave can be thought of as a neocloud. Neoclouds are businesses that build data centers and outfit them with clusters of GPUs. Once constructed, CoreWeave rents access to this infrastructure through a cloud-based platform.
This model is beneficial for companies that may not be able to procure necessary resources -- chips, servers, and networking equipment -- or cannot afford the timeline required to build their own AI infrastructure.
Image source: Getty Images.
How is CoreWeave's business performing?
Over the last year, big tech hyperscalers have been accelerating their investment in AI capital expenditures (capex).
Data by YCharts.
While much of this spend has gone toward building custom data centers, many of the hyperscalers have been increasingly turning to neoclouds as a complement to their existing infrastructure. CoreWeave has been a direct beneficiary of these tailwinds.
At the end of the third quarter, CoreWeave boasted $55.6 billion in backlog -- representing an increase of 271% year over year.
Among the company's notable customers is OpenAI, which has a total commitment of $22.4 billion to CoreWeave across three tranches. In addition, CoreWeave signed a multiyear deal worth $14.2 billion with Meta Platforms during the third quarter.
Lastly, Microsoft is CoreWeave's largest customer -- currently accounting for 67% of the company's revenue. While this does raise some concern about customer concentration, demand for CoreWeave's services is accelerating rapidly from new AI developers.
Over time, the company should become less exposed to any single hyperscaler as CoreWeave broadens its reach amid accelerating AI infrastructure investment.
Is CoreWeave stock a buy right now?
According to consensus Wall Street estimates, CoreWeave's revenue is expected to rise nearly fourfold over the next two years. Given the company's current market capitalization of $42 billion, CoreWeave trades at an implied price-to-sales (P/S) ratio of 2.2 based on expected 2027 revenue.
Despite being a much larger company, CoreWeave's valuation is about one turn lower than competing neocloud providers Iren and Nebius Group -- which both trade for 3.3x projected 2027 sales.
Data by YCharts.
One aspect of CoreWeave's business that skeptics often bring up is the company's debt profile. Building data centers requires hefty capital outlays upfront, and procuring GPUs can prove equally daunting. For this reason, CoreWeave has taken on more than $13 billion in debt to finance its infrastructure buildouts as the hyperscaler projects come online.
However, this is where Nvidia's investment becomes a focal point of the buy thesis. Nvidia signed a $6.3 billion deal with CoreWeave in which the semiconductor powerhouse agreed to purchase unused capacity in the event that it is not fully realized by the existing customer base.
This is strategically important, as Nvidia could serve as a safeguard for CoreWeave in case the company overbuilds or encounters hiccups with existing customers. To me, the relationship with Nvidia and the underlying mechanics of the deal structure remove much of the perceived risk around CoreWeave and its ability to grow or pay down debt.
I think CoreWeave has taken massive steps in laying the groundwork for a successful long-term roadmap in the AI infrastructure era. Given the company's soaring backlog, impressive customer acquisition efforts, and savvy alliance with Nvidia, I think now is a great time to buy shares of CoreWeave stock at a discount to its peers.
