Advances in artificial intelligence (AI) over the past few years have captivated Wall Street and Main Street alike. These next-generation algorithms are changing the fortunes of companies across the tech landscape, and the most high-profile of these is arguably Nvidia (NVDA 1.48%).
The chipmaker was already the premier provider of the graphics processing units (GPUs) that rendered lifelike images in video games. Those same chips quickly become the gold standard for powering AI systems. Since the dawn of AI in early 2023, Nvidia stock has soared 1,180% (as of this writing), so when it takes an interest in another AI company, it captures investors' attention.
Just this week, Nvidia nearly doubled its stake in CoreWeave (CRWV 1.94%), prompting investors to take a fresh look at the neocloud operator.
Image source: Getty Images.
Neocloud in a nutshell
While cloud computing is well established, the rise of the neocloud has just begun. Simply put, these specialty cloud operators provide customers with GPU-as-a-service (GPUaaS) and AI-as-a-Service (AIaaS) -- and CoreWeave is the largest of the neocloud providers.
One key competitive advantage is the company's strategic relationship with Nvidia, which gives CoreWeave access to the latest and greatest AI processors the chipmaker has to offer. Nvidia had already established a significant position in CoreWeave, holding more than 24 million shares. This week, Nvidia nearly doubled its holdings, bringing its total stake to more than 47 million shares worth a cool $4.6 billion, or about 11.5% of CoreWeave's outstanding stock. It also represents more than 90% of the chipmaker's equity portfolio.
Nvidia CEO Jensen Huang sang the neocloud operator's praises, saying in a statement:
CoreWeave's deep AI factory expertise, platform software, and unmatched execution velocity are recognized across the industry. Together, we're racing to meet extraordinary demand for Nvidia AI factories -- the foundation of the AI industrial revolution.
Given Nvidia's deep ties and huge vote of confidence in CoreWeave, should investors follow suit?
NASDAQ: CRWV
Key Data Points
By the numbers
CoreWeave's growth is compelling. In the third quarter, revenue of $1.36 billion surged 134% year over year, resulting in a loss per share of $0.22, which improved 88%.
Equally as important was the company's backlog, which more than doubled year over year to $55 billion, providing clear visibility into future revenue. In fact, CEO Michael Intrator said on the earnings call that "demand for CoreWeave best-in-class AI cloud platform far exceeds available capacity."
As CoreWeave scales to meet the insatiable demand, it continues to pour money into capital expenditures (capex), with 2026 spending "well in excess of double" that of 2025. This should help the company build out the capacity necessary to meet the demand -- something Nvidia's investment will help with.
To buy or not to buy?
CoreWeave isn't yet profitable, and some investors will balk at the company's growth-at-all-costs strategy. That said, the stock is selling for less than 10 times sales, down from its peak of 27 times sales in mid-2025.
Given Nvidia's mentorship, the company's explosive revenue growth, and its improving profit outlook, I would argue that owning a small stake in CoreWeave -- as part of a balanced portfolio -- might turn out to be a profitable venture.
