Meta Platforms (META +0.02%) is spending huge sums of cash to build out its artificial intelligence (AI) infrastructure, but in the meantime, it needs some help. Guaranteeing access to high-end Nvidia (NVDA 0.39%) GPUs isn't easy. Plus, it's dedicating a significant amount of its data center capacity to its custom AI accelerator chips. That's why it's signing big deals with the so-called neocloud providers.
The services of companies like CoreWeave (CRWV 0.76%) and Nebius Group (NBIS +0.69%) have risen in popularity as demand for AI training and inference capacity outstrips the hyperscale cloud providers' ability to supply it. These neocloud operators build data centers specifically designed for artificial intelligence needs, often working closely with Nvidia. That enables them to garner huge contracts from big tech companies. Meta recently committed to spending $21 billion with CoreWeave just after agreeing to spend up to $27 billion with Nebius.
Given all the cash headed their way, investors may be getting excited about each of these companies' prospects. But just because they're able to strike massive deals doesn't make their stocks a buy. Here's what investors need to know.
Image source: Getty Images.
Leveraging long-term contracts
Both Nebius and CoreWeave look to sign long-term contracts with big AI companies like Meta and OpenAI. Those contracts often include language guaranteeing payment regardless of usage, which is especially valuable when a massive business with positive cash flow (like Meta, for example) is the counterparty. That means the neocloud can secure capital at a relatively low interest rate based on those contracts. (Nebius is less reliant on debt, but it has diluted shareholders by raising capital via secondary stock sales.)
Nebius issued $8.3 billion of debt in March after signing its deal with Meta. That more than tripled the amount of debt on its balance sheet compared to where it stood as of the end of 2025.
Likewise, CoreWeave announced it was issuing $6.25 billion in additional debt in the month of April so far. That was on top of the $21 billion in debt sitting on its balance sheet as of the end of 2025.
NASDAQ: CRWV
Key Data Points
That said, their revenue growth is undeniable. CoreWeave's sales soared 168% last year to $5.1 billion. The smaller Nebius grew sales 479% to $530 million. That growth was fueled by both companies' ability to execute. With demand for AI cloud capacity outstripping supply, the only constraint on their revenue growth is how quickly they can build data centers and stand up servers. The market is well aware that this will be key: When CoreWeave reported its Q3 results in November, management announced a delay in its capacity build-out, and the stock cratered as a result.
The things investors need to be wary of with these companies are the cost of capital and management's ability to achieve solid returns on their capex investments. Both are currently loss-making operations. Nebius lost $447 million last year, 87% more than in 2024. CoreWeave lost $1.2 billion, 35% more than in 2024. Those losses could continue for the foreseeable future, but investors will want to see a path toward profitability.
The question for investors is which company is poised to produce better long-term results from here.
Which is a better buy
The biggest concern with neocloud providers is that what they offer is practically a commodity. True, access to GPUs is limited now, and Nebius' and CoreWeave's close relationships with Nvidia have given them prime access to new GPUs while hyperscalers are forced to take whatever volumes they can get. Nvidia notably holds stakes in both companies.
But when supply constraints ease, Nebius and CoreWeave will have to prove their value or risk losing their biggest customers, which can build plenty of data centers themselves. That time may be coming sooner rather than later. Meta is focused on expanding the capabilities of its own custom AI accelerator chips, as are the other hyperscalers.
Nebius is focused on offering a full-stack solution, providing everything from data center design to optimizing software. CoreWeave aims to differentiate its product by optimizing its infrastructure for AI with Nvidia's networking chips and access to bare-metal servers that don't require virtualization.
NASDAQ: NBIS
Key Data Points
It's worth noting, however, that those optimizations are only valuable at scale. That makes them much more appealing to massive companies like Meta or OpenAI. But those are exactly the companies that can benefit even more by building their own infrastructure, and they have the capital to do so. As such, the long-run opportunities for both neocloud companies are highly uncertain.
That said, if investors want to capitalize on the current demand cycle, they should consider the stocks' valuations. Nebius' enterprise value is roughly half that of CoreWeave's. Meanwhile, CoreWeave's estimated revenue for the year is nearly 4 times higher. In that light, it's hard to justify Nebius' substantial premium.
While Nebius is growing its revenue substantially faster, it's also in an earlier growth stage. Nebius could further dilute its shareholders with secondary stock sales, and its earnings could get much worse before they start improving. In the medium term, CoreWeave should begin to show meaningful progress toward profitability. As such, there's slightly less uncertainty for that stock, especially at its current valuation relative to Nebius.
