Wednesday gave the artificial intelligence (AI) cloud specialists a preview of their biggest structural risk: the customer that becomes a competitor. Bloomberg reported that Meta Platforms is developing a cloud business that would sell AI computing power -- including, possibly, raw computing capacity of the kind specialist providers rent out today. Shares of CoreWeave (CRWV +1.39%) plunged 13.9% to $85.68, and Nebius Group (NBIS -0.62%) sank 17% to $229.18.
The reaction wasn't just about new competition. Meta is one of the biggest customers both companies have -- CoreWeave has disclosed a $21 billion commitment from Meta, while Nebius landed an agreement with Meta worth up to $27 billion. A Meta that builds enough capacity to sell the excess is a Meta that may eventually rent less of it.
With CoreWeave now down about 48% from its 52-week high of $166.22 and Nebius down about 24% from its high of $299.86, which beaten-down stock is the better rebound bet? The answer comes down to what a dollar invested in each buys you in growth, contracted revenue, and balance-sheet risk.
Image source: Getty Images.
CoreWeave: enormous backlog, enormous debt
Of the two companies, CoreWeave is the scale leader. First-quarter revenue rose 112% year over year to $2.08 billion, and the company's revenue backlog reached $99.4 billion -- including that Meta commitment -- with more than 3.5 gigawatts of contracted power. Management also reaffirmed its full-year revenue guidance of $12 billion to $13 billion.
"AI natives and enterprise customers are choosing CoreWeave because we sit between the models and the silicon," said CEO Michael Intrator in the company's first-quarter earnings release.
NASDAQ: CRWV
Key Data Points
The trouble is what it costs to build ahead of that backlog. CoreWeave's first-quarter net loss widened to $740 million from $315 million a year earlier, and its total debt reached $24.9 billion after it spent $7.7 billion on property and equipment in the quarter alone. Interest expense doubled year over year to $536 million -- nearly half of the company's $1.16 billion in adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA). And that adjusted EBITDA margin compressed to 56% from 62% a year earlier.
At about $46 billion in market value, the stock trades at roughly 3.7 times this year's expected revenue -- cheap-sounding, until you remember the equity sits beneath nearly $25 billion of debt and widening losses.
Nebius: faster growth, cleaner books
Nebius is far smaller but growing far faster. First-quarter group revenue rose 684% year over year to $399 million, and annualized run rate revenue jumped to $1.9 billion from $1.25 billion just one quarter earlier. Management is guiding for $3 billion to $3.4 billion of revenue in 2026 and a run rate of $7 billion to $9 billion by year-end.
Profitability is arriving alongside the growth. The AI cloud business's adjusted EBITDA margin nearly doubled sequentially to 45%, and the group generated $2.3 billion of positive operating cash flow in the quarter, helped by upfront customer payments. Nebius ended March with $9.3 billion in cash after raising $6.3 billion during the quarter, including a $2 billion investment from Nvidia. Its adjusted net loss was a comparatively modest $100.3 million.
NASDAQ: NBIS
Key Data Points
The catch is the price. At about $58 billion in market value, Nebius trades at roughly 18 times the midpoint of this year's revenue guidance -- almost five times CoreWeave's forward sales multiple. Buyers are paying for the trajectory, not the present.
Which is the better rebound bet?
Both companies face the same two structural risks Wednesday exposed: heavy dependence on a handful of tech giants and the possibility that those giants' own build-outs eventually soften AI computing prices. Neither stock is a conservative investment, and I'd keep either position small.
But if I had to pick one of these two stocks to buy, it would be Nebius. CoreWeave's cheaper valuation comes with $25 billion of debt and interest costs consuming nearly half its adjusted EBITDA. Further, its margins are moving in the wrong direction. Yes, Nebius costs more per dollar of near-term revenue, but it pairs faster growth with expanding margins, positive operating cash flow, and enough cash to keep building without leaning nearly as hard on debt.
