Nebius (NBIS) vs CoreWeave (CRWV): The AI Cloud Rivalry Rewired
Two obscure-sounding stock tickers, NBIS and CRWV, have suddenly taken center stage in the AI gold rush. Nebius (NBIS) and CoreWeave (CRWV) are upstart rivals supplying the computing horsepower behind cutting-edge artificial intelligence. Now, thanks to a blockbuster partnership with Microsoft, Nebius appears poised to outshine CoreWeave as the smarter investment in this booming "AI cloud" sector.
Both Nebius and CoreWeave operate hyperscale data centers filled with advanced Nvidia GPUs, the specialized chips essential for training and running AI models like ChatGPT. In today's tech economy, GPUs are the new oil. Demand is exploding as every company races to build smarter AI systems. Microsoft and other tech giants have been scrambling to secure enough of these chips and the cloud capacity to use them. This is where our two contenders come in, essentially acting as arms dealers in the AI arms race by renting out GPU power to those who need it.
Nebius just hit the jackpot. Microsoft, facing a shortage of AI computing power on its own Azure cloud, signed Nebius to a $17.4 billion deal to provide dedicated GPU infrastructure over five years. The contract could even expand to about $19 billion if Microsoft's needs grow. To put that in perspective, a $17B commitment is massive, roughly the annual revenue of a Fortune 150 company, all flowing to a firm many people had never heard of. News of this partnership sent Nebius's stock soaring nearly 50% in a day. For Nebius, a relatively new player, Microsoft's vote of confidence is not just a big check. It is validation that Nebius can deliver at the very highest level of cloud service. Investors responded accordingly, instantly repricing Nebius from an underdog into a frontrunner.
CoreWeave, meanwhile, has been the early favorite in this niche. The company pivoted from crypto mining to AI cloud and rapidly became a go-to provider for heavyweights like OpenAI, the maker of ChatGPT. In fact, CoreWeave inked its own multibillion-dollar contracts earlier. It has been supplying OpenAI with GPU power under deals reportedly worth over $10 billion, and Microsoft had previously agreed to spend up to $10 billion with CoreWeave as well. That propelled CoreWeave to a high profile and a rich valuation when it went public. However, Microsoft's latest move suggests the landscape is shifting. Rather than giving CoreWeave all of its business, Microsoft chose to diversify by bringing Nebius on board. Even CoreWeave's biggest customer decided not to put all its eggs in the CoreWeave basket. This speaks volumes. Nebius could match what CoreWeave offers in technology, capacity or cost, and Microsoft wanted a second supplier. For Nebius, that is a huge credibility boost. For CoreWeave, it is a warning shot that competition is heating up.
From an investor's perspective, Nebius now makes a strong case for being the better bet moving forward. One reason comes down to financial fitness. Nebius spun out of Russian tech giant Yandex's cloud division last year, relisting as an independent company in Amsterdam. It emerged with a clean balance sheet and substantial backing, around $700 million in fresh funding from its inception. Until now Nebius was smaller in scale, but it was also relatively debt-light and disciplined in its expansion. CoreWeave, by contrast, took a "grow at all costs" approach. It secured enormous amounts of capital, raising at least $2.6 billion from investors and reportedly taking on high-interest debt of about $2 billion in a recent bond issue to finance its GPU buying spree. The result is that CoreWeave scaled up fast, but it is carrying a heavy debt load and the high interest payments that come with it. In an era of rising rates, that is a significant burden. Essentially, CoreWeave bet big that pouring money into infrastructure quickly would pay off later. Nebius is now showing there was another path. Win a giant customer contract first, then build out capacity with revenue in hand rather than borrowed money.
To be sure, CoreWeave is still a formidable player. It leads in current size. The company has forecast about $5 billion in revenue for 2025 and claims a whopping $26 billion backlog of future AI cloud orders. Nebius until recently had only a fraction of that business. But Microsoft's deal goes a long way toward closing the gap. That single contract guarantees Nebius roughly $3.5 billion per year of revenue over the next five years, putting Nebius on a rapid catch-up trajectory. With this backbone customer secured, Nebius can aggressively expand its data centers. In fact, it is already opening a large facility in New Jersey just for Microsoft's workloads. Wall Street analysts have noted that the Microsoft deal "de-risks" Nebius's growth plan. It brings clarity and lowers uncertainty around Nebius's future cash flows. CoreWeave's large backlog is impressive, but it also has to execute on all those orders while managing its financing. And if new competitors like Nebius are entering the fray for the next big contracts, CoreWeave's presumed lead might not be so secure after all.
There are also qualitative differences between the two companies that hint at Nebius's potential advantage. Nebius, with its engineering roots in Yandex, is a vertically integrated operator. It designs its own cloud software platform and custom-builds some of its hardware stack around Nvidia's top-end chips. It has been expanding methodically, setting up operations not just in the U.S. but across Europe, from the Netherlands to Finland and even Israel, where Nebius was selected to build a national AI supercomputer. This global and technical pedigree suggests Nebius knows how to squeeze maximum performance and efficiency from its infrastructure. CoreWeave, on the other hand, grew out of a very scrappy origin and took on a more America-centric, move-fast-and-scale-big strategy. It partnered closely with Nvidia and others, which gave it early access to gear and big-name backing, but it might not have the same end-to-end control that Nebius's team does. None of this is to say CoreWeave is not technologically capable. It absolutely is, or companies like OpenAI and Microsoft would not have worked with them at all. However, Nebius's ability to land Microsoft now indicates it has reached parity in the eyes of top-tier customers. And Nebius might operate with more cost discipline, a crucial factor when providing cloud services at giant scale. Margins can vanish quickly if costs run wild. A leaner, more efficient operation could make Nebius more profitable in the long run, whereas CoreWeave must earn enough not only to cover operations but also to service its large debts.
Ultimately, both Nebius and CoreWeave are riding a powerful wave. The world's thirst for AI computing seems insatiable, and both companies fill a critical niche by renting out the picks and shovels of the AI era. In all likelihood, demand is so high that both will continue to grow for some time. This is not a zero-sum game yet. Microsoft itself chose to use both providers, after all. But for stock pickers looking at which company has the edge, the calculus has clearly shifted in Nebius's favor recently. Nebius now has the momentum of a landmark deal that not only brings in revenue but also attracts attention. Other prospective customers will surely take note that Microsoft chose Nebius. That is as good an advertisement as any. The company's cleaner financial foundation means it can expand without as many strings attached. And the sheer scale of Microsoft's partnership gives Nebius a chance to leapfrog ahead in expertise and infrastructure, as it will be delivering at unprecedented scale and likely learning invaluable lessons along the way.
CoreWeave, for its part, faces a classic high-growth challenge. Can it keep expanding at breakneck speed without stumbling under the weight of its obligations? Its story is not over, far from it. CoreWeave still holds key client relationships and is reportedly preparing to ramp up capacity further, even considering more fundraising. But investing is often about forward-looking advantage, and right now Nebius has captured a narrative of being the one with clearer skies ahead. It is not often that a smaller newcomer gets a massive endorsement from a tech titan while an incumbent is forced to share the spotlight.
In the grand scheme, the competition between Nebius and CoreWeave might ultimately benefit the AI industry as a whole. More providers mean more capacity and potentially better prices for AI researchers and companies. But in the narrower view of an investor deciding where to place a bet, Nebius looks increasingly like the favorite to deliver outsized returns. It has the big contract, the global expansion plan, and a seemingly smoother financial runway. If the AI cloud is the next big arena of tech, Nebius just grabbed a championship title belt that few saw coming. And in doing so, it may have proven that NBIS, not CRWV, is the ticker to watch in this next chapter of the AI revolution.
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