CoreWeave vs Nebius: Which AI Cloud Stock to Buy After Plunge?
💡 Key Takeaway
Despite both plunging on Meta's cloud competition, Nebius (NBIS) is a better rebound bet than CoreWeave (CRWV) due to faster growth and lower debt.
AI Cloud Stocks Plunge on Meta Competition Risk
On Wednesday, Bloomberg reported that Meta Platforms is developing a cloud business to sell AI computing power, including raw computing capacity. This news sent shares of CoreWeave (CRWV) down 13.9% to $85.68 and Nebius Group (NBIS) down 17% to $229.18.
The market reaction stemmed from the fact that Meta is a major customer for both companies. CoreWeave has a $21 billion commitment from Meta, while Nebius landed an agreement worth up to $27 billion. A Meta that builds enough capacity to sell excess could eventually rent less from these providers.
CoreWeave reported first-quarter revenue of $2.08 billion, up 112% year over year, with a revenue backlog of $99.4 billion. However, its net loss widened to $740 million, total debt reached $24.9 billion, and interest expense consumed nearly half of adjusted EBITDA.
Nebius reported a 684% revenue increase to $399 million, with annualized run rate jumping to $1.9 billion. Adjusted EBITDA margin nearly doubled to 45%, and the company generated $2.3 billion in operating cash flow. It ended the quarter with $9.3 billion in cash after raising $6.3 billion, including a $2 billion investment from Nvidia.
Structural Risk Exposed: Customer Becoming Competitor
The Meta news highlights a key risk for AI cloud specialists: heavy dependence on a handful of tech giants. If these giants build their own capacity and sell it, pricing power could erode and revenue may decline. This affects the long-term growth prospects and valuation of companies like CoreWeave and Nebius.
CoreWeave's massive debt burden ($24.9 billion) and widening losses make it vulnerable to any slowdown. Its EBITDA margin compressed from 62% to 56%, and interest costs are rising. Investors are paying a low revenue multiple (3.7x), but that reflects the high financial risk.
Nebius, while trading at a higher multiple (18x forward sales), offers faster growth (684% revenue growth), expanding margins, and a strong cash position. The Nvidia investment validates its technology. If the AI cloud market grows as expected, Nebius is better positioned to capture share without the same debt drag.
Both stocks face the same macro risk, but Nebius's cleaner balance sheet and trajectory make it the more resilient pick in our view.
Source: The Motley Fool
Analysis generated by Bobby AI quantitative model, reviewed and edited by our research team. This is not financial advice. Always do your own research before making investment decisions.
Bobby Insight
Nebius (NBIS) is the better rebound bet over CoreWeave (CRWV) despite the near-term risk from Meta's cloud.
Nebius offers faster revenue growth, expanding margins, positive operating cash flow, and a strong cash position with less debt. While more expensive on a sales basis, its financial strength and trajectory provide a better risk-reward profile for a rebound.
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