Artificial Intelligence Stocks Comparison: CoreWeave versus Nebius - Which one performs better?
In the world of AI-focused stocks, two companies stand out - Nebius Group (NBIS) and CoreWeave (CRWV). Between these two, Nebius Group appears to be the better investment option for those seeking a balance between value, growth, and analyst support.
Price-to-Sales Ratio and Valuation
CoreWeave, a larger, leveraged, high-growth company, boasts a market cap of around $68 billion and a heavy debt load of $18.8 billion. Nebius, on the other hand, is debt-free, with a smaller capital expenditure of $2 billion, demonstrating a more conservative and efficient use of capital. This implies Nebius likely trades at a more attractive price-to-sales ratio and lower valuation risk.
Growth Prospects
CoreWeave has a large $26 billion backlog but comes with higher downside risk due to its leveraged position and U.S.-centric focus. Nebius, with a global, diversified footprint across 5 countries and strategic NVIDIA partnerships, offers potentially faster international growth and agility.
Analyst Ratings
CoreWeave holds a Hold consensus rating, suggesting the stock may be seen as fairly valued or risky at current prices. Nebius, however, has a Buy rating, indicating analysts see more upside potential.
Stock Performance and Market Sentiment
Although CoreWeave shares surged post-IPO, they have been volatile and do not appear on top analyst recommendations. Nebius, with a Buy rating, is positioned as a compelling growth opportunity in AI infrastructure, focusing on speed and strategic international market capture.
Nebius's Strong Performance
Nebius's annual revenue run rate improved significantly, reaching $310 million in April and forecasted to reach $750 million to $1 billion by the end of the year. In the first quarter, Nebius saw a 385% revenue jump year over year, reaching $55 million.
CoreWeave's Aggressive Expansion
CoreWeave's revenue and backlog have also grown significantly, with a fivefold increase in Q1 to $981 million. The company plans to acquire Core Scientific for $9 billion, which could bring an additional 1 GW of data center capacity and potentially lower costs. This acquisition is expected to reduce CoreWeave's future lease liabilities by over $10 billion and save $500 million in annual costs by 2027.
Diversified Offerings
Nebius offers more than just AI hardware infrastructure to customers, including developer tools and services for refining AI models, running inference tasks, and developing custom solutions. CoreWeave, on the other hand, offers access to top-of-the-line GPUs from Nvidia and server processors from AMD.
Market Outlook
The cloud AI market is projected to reach $650 billion annually by 2030, according to Grand View Research, providing ample opportunities for both Nebius and CoreWeave to grow. CoreWeave's faster growth, large revenue backlog, and ample resources for expansion make it a strong choice for investors considering which AI stock to add to their portfolios.
In summary, Nebius Group combines disciplined capital strategy, favorable growth outlook, and strong analyst support, making it a potentially better investment than CoreWeave based on price-to-sales ratio and growth prospects at present. However, CoreWeave remains a high-reward but higher-risk option given its aggressive expansion strategy. Both companies have seen significant share price increases this year, with CoreWeave up 224% and Nebius up 84%.
- Nebius Group's conservative and efficient use of capital, combined with a favorable price-to-sales ratio, indicates a potentially lower valuation risk compared to CoreWeave.
- Nebius's global footprint, strategic partnerships, and strong analyst support suggest a faster international growth and strategic market position in the AI infrastructure sector.
- Despite CoreWeave's faster growth and large revenue backlog, Nebius's disciplined capital strategy, promising growth prospects, and strong analyst support make it a potentially better investment at present, given the lower valuation risk and growth potential.
