The first wave of artificial intelligence (AI) investing produced several major winners, such as Nvidia, Broadcom, and Taiwan Semiconductor Manufacturing. These companies grew into multi-trillion-dollar companies in a few years, and even though I think they're still strong picks moving forward, other stocks offer even greater upside as the next wave of AI investing hits.
Where I'm looking for new AI investment now is in the neocloud space, which offers AI-focused cloud computing. There are several strong competitors in this sector, but I've got my eyes on two in particular: Nebius (NBIS +3.20%) and CoreWeave (CRWV +0.60%). Each of these looks like a strong pick to crush the market over the next few years and establish itself as a top AI investment pick.
But they aren't as surefire of picks as the first wave of AI investing. Let's take a closer look at each.
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Nebius and CoreWeave are growing rapidly
Nebius and CoreWeave are both major players in the neocloud space, but each has slightly different offerings. However, their core concept is simple: Give clients everything they need to build, train, and run AI applications. This has led to huge growth for both companies, and it doesn't appear to be slowing down anytime soon.
Nebius has landed major contracts with Microsoft and Meta Platforms, and is also backed by Nvidia. This legitimizes Nebius's platform and shows that it's among the top available.
NASDAQ: NBIS
Key Data Points
Nebius has delivered jaw-dropping growth, with Q1's revenue rising 684% year over year. That strength is expected to continue over 2026 and into 2027, with revenue estimated to rise by 547% in 2026 and 233% in 2027. There are very few companies in the market that are growing that quickly, making Nebius a great stock to consider buying.
CoreWeave is a bit larger and more mature than Nebius, but that doesn't mean it isn't growing quickly. Similar to Nebius, CoreWeave has major deals with Meta and Microsoft, and is also backed by Nvidia. The giant chipmaker has many places it could invest its money, and choosing Nebius and CoreWeave is a great stamp of approval.
In Q1, CoreWeave's revenue rose 112% year over year to $2.1 billion, and its revenue backlog reached nearly $100 billion. It will work to convert a large part of that backlog into actual revenue over the next few years, and Wall Street is confident in CoreWeave's growth rates. Analysts expect 147% growth in 2026 and 98% growth in 2027. Those are solid figures, and showcase that CoreWeave has a long way to go before slowing down.
At face value, both of these companies look like great investment options with huge potential, and they are. But there is one item investors must watch out for as well.
NASDAQ: CRWV
Key Data Points
Building data centers isn't cheap
Both CoreWeave and Nebius are heavily investing in building and acquiring data center space to host their servers. This isn't cheap, and CoreWeave and Nebius have no base business to fund these aspirations. So, they must raise money through issuing shares or taking on debt. Both companies are trying to raise as much money as possible, and shareholder dilution and rising debt levels are occurring. Furthermore, neither company is profitable, so there is significant execution risk for both.
This makes CoreWeave and Nebius stocks a bit riskier than the first wave of AI stocks, which were generally guaranteed winners. If these two can build an AI computing empire, manage debt, and deliver solid profits, then they could be excellent investments. However, there is no guarantee, which also increases the chance of the investment flopping.
I believe in both businesses, but it won't be easy for them to succeed.
