Hi Everyone,
Coreweave was compared to Nebius, and the conclusion of the article is that Coreweaves forward PS is 5.3 vs Nebius forward PS is 8.9, so Coreweave is a better value. Coreweave is expected to grew eanings about 5x this year while Nebius grew ARR 6.8 x in year.
Faster growth and a lower forward PS estimate, means cased closed Coreweave is the way to go right?
Well let’s look at a comparison.
Debt: Coreweave has $8.7B, Nebius minimal debt.
Geographic strategy: Coreweave is mostly in the US, Nebius is in US, EU, and Middle East.
Profitablity: Coreweave’s path to profits are unclear, Nebius expects to be profitable by the end of the year.
Technology Support: Nebius has a software sweet that helps customers manage AI and minimize power usage, Coreweave does not.
Cost: Nebius undercuts Coreweave by 30-40% for long-term, high volume AI projects.
Also not mentioned in the article are the other business NBIS has a stake in, which are very valuable businesses which I have previously discuss. I think that AI applications are focused on cost and speed. It’s a limited and valuable commodity, today. Ultimately, business will want to spend the least amount of money delivering their AI applications, and there’s where Nebius shines, so Nebius is where I am placing my bet.
I also have a full position in Nebius for the reasons you call out. I am very confident in their ability to perform technically especially with their software stack with training by Toloka. This is critical for smaller, less technically empowered companies. And I am confident in the AI service market for the next couple years. I am less confident in how smooth the orders and deployment will be. Could be very lumpy revenue recognition creating stock price gyrations. What is sometimes overlooked by investors is the fact that Nebius isn’t just offering chips for rent. Nebius has a full-stack AI-as-a-Service that combines hardware and software. Put your seatbelts on for NBIS.
As far as I can tell the attractiveness that authors are seeing are 1) Very high growth numbers and 2) A 30%+ pull back and oversold share price leading to some “value” arguments in comparison with Nebius and others.
I do feel that Debt to Equity at 380+%, debt levels of over $11bn and interest repayment at over 10% are of major concern although CoreWeave claim to be on target to reach profitability by Q2 2026.
Other concerns to consider include: potential disruption from lower cost chip development programmes by other hyperscalers, customer concentration risk with Microsoft, elongated depreciation policies and its lockup expiry in September.