CoreWeave vs Nebius Group: why such similar companies will suit different investors

CoreWeave and Nebius Group have similar businesses. Both companies build full-service infrastructure for AI developers. They share a common partner, Nvidia, which not only supplies them with their AI gas pedals, but also owns stakes in both companies. Both CoreWeave and Nebius have reported impressive Q2 2025 numbers, but investors have taken them differently. Which is something to consider when adding shares of these companies to your portfolio.

CoreWeave's path to its current business model was winding: the startup appeared in 2017 under the name Atlantic Crypto, and its founders Michael Intrator, Brannin McBee, and Brian Venturo first started mining cryptocurrency. But in 2018, the cryptocurrency market collapsed, and the businessmen began buying up high-speed GPUs from less fortunate colleagues to rent them out. The demand for such services turned out to be stable: developers in the field of artificial intelligence needed more and more capacity. Then the company decided to focus on cloud services.

CoreWeave now operates 33 data centers: 28 in the United States and the rest in continental Europe and the United Kingdom. CoreWeave was one of the first in the market to get ultra-high-power Blackwell GPUs from its investor Nvidia when industry leaders were after them.

However, some of the startup's competitors in the hunt for advanced Nvidia chips eventually became its customers. For example, Google and Microsoft are leasing capacity from CoreWeave. Another key customer is OpenAI. Just before CoreWeave's IPO, developer ChatGPT entered into a five-year, $11.9 billion agreement with the company and took a stake in it. The parties then expanded the deal by another $4 billion. CoreWeave's customer pool includes other big names: British telecom provider BT Group, technology subsidiaries LG Group and Toyota, as well as several neural network developers.

In March 2025, CoreWeave raised $1.5 billion in an IPO on Nasdaq, selling 37.5 million shares at $40 each. The initial public offering was not as successful: the company initially expected to sell 49 million shares at $47-55 per share.

In the case of CoreWeave, there are several things to consider, explained Bloomberg IPO results to D.A. Davidson & Co. analyst Jill Luria. Jim Luria. First, for its key customer Microsoft (which accounted for 62% of annual revenue in 2024), CoreWeave's capacity is just a way to move lower-priority processes onto someone else's infrastructure. Second, Nvidia increased its stake in the company during the IPO, but spent a small amount for itself and remained a minority shareholder. CoreWeave's business model will continue to work as long as the demand for AI grows, Luria concluded.

The AI boom is indeed allowing CoreWeave to grow revenue significantly. But its growth rate, while still impressive, is slowing down as the low base effect at launch wears off. In 2024, revenue grew more than 730% year over year to $1.9 billion; in 2023, it grew 1350% year over year to $228.9 million; in Q1 2025, it grew 420% year over year to $981.6 million; and in Q2, it grew 206% year over year to $1.2 billion.

The company's adjusted EBITDA was $753.2 million for the second quarter of this year, $606.1 million for the first quarter, and about $1.2 billion for 2024.

Another problem for CoreWeave is losses. Its net loss was $314.6 billion in January-March of this year, $290.5 billion in Q2, and $863.4 billion by the end of 2024. The cloud provider also met the previous two years, albeit with a smaller loss.

CoreWeave's becoming profitable has been hindered by its aggressive expansion in cloud services. "We are scaling rapidly in an effort to meet the unprecedented demand for AI," explained CoreWeave CEO Michael Intrator, commenting on the Q2 2025 earnings. The company recently acquired AI developer Weights and Biases and has entered into an agreement to buy mining data center operator Core Scientific.

Its capital expenditures, made up of investments in real estate and equipment, are also on the rise. They totaled $2.9 billion in Q2, up $1 billion from the previous quarter, CoreWeave CFO Nitin Agrawal clarified on a call with analysts. The startup has planned $2.9 billion to $3.4 billion in expenses for Q3, and they could total $20 billion to $23 billion for the year.

According to Livy Investment Research analysts, the strategy of aggressive capex increase under multi-year contracts is a weak point of CoreWeave's business model, as the demand for renting computing power and buying new processors from bigtechs is not so impressive now. CoreWeave itself estimates its order book at $30.1 billion, but Livy Investment Research calculates that cash flows from the startup's two key customers - Microsoft and OpenAI - are unlikely to cover the reported $20-23 billion in expenses.

All this will inevitably lead to an increase in the company's already large debt burden, Barron's suggests. Currently, the startup has a debt-to-equity ratio of 2.8.

"We live in an amazing time. Thanks to the rapid development of AI, we are on the cusp of a great technological leap. To make it, we need to create a new infrastructure for AI. This is a major challenge for the next decade. With the exception of a handful of large tech companies, few newcomers have both the technological expertise and the multi-billion dollar capital needed to work in this field. Nebius is one of them", - this is how Arkady Volozh, its CEO, began his letter to shareholders and investors dedicated to the results of the second quarter of 2025.

The path of Nebius Group, CoreWeave's smaller competitor by market capitalization ($17.2 billion vs. $50.2 billion), to the cloud market has been no less tortuous. The company went public on the Nasdaq back in 2011 as Yandex N.V., the parent company of the Russian search engine of the same name. And in the winter of 2022, trading of Yandex N.V. shares on Nasdaq was suspended due to Russia's invasion of Ukraine.

They resumed only in the fall of 2024 after the division of Yandex's business into Russian and foreign. Yandex N.V. from the "divorce" got a large data center in Finland with a supercomputer ISEG, which was among the top 500 most powerful computing machines, AI startup Toloka, the developer of solutions for drones Avride, as well as part of the Yandex team. The company changed its name to Nebius Group.

Nebius now has two clusters in the U.S. and two in continental Europe, one each in the U.K., Iceland and Israel, as well as a second supercomputer, according to its presentation. Like CoreWeave, it has landed landmark customers - domain name management and web traffic optimization solutions developer Cloudflare, investment firm Prosus, retail software developer Shopify, Uber and Hyundai. Nvidia, a key supplier of Blackwell processors for Nebius, was among the investors in the private placement.

And Nebius' subsidiary Nebius Toloka raised $72 million from Amazon founder Jeff Bezos' Bezos Expeditions fund.

The AI frenzy is providing Nebius with equally impressive revenue growth, and the rate of growth is accelerating: up 462% to $117.5 billion in 2024 and nearly 55% to $20.9 million in 2023. This year's quarterly revenue results were also strong: plus 625% year-over-year to $105.1 million in Q2 and plus 385% year-over-year to $55.3 million in Q1.

But like CoreWeave, Nebius remains unprofitable: its adjusted net loss in the second quarter of this year was $91.5 million, up 49% year-over-year

Nebius' adjusted EBITDA declined by 64% in Q2 and is in negative territory - minus $21 million, which means that the company's core business is making losses.

But this year, judging by the quarterly statements, the company is closing the gap - adjusted EBITDA in the first quarter amounted to minus $62.6 mln, a figure down 12%. 2024 brought Nebius an adjusted EBITDA loss of $266.4 million.

Nebius, like CoreWeave, is actively spending money on business growth: on the purchase of Blackwell chips, on the development of a new cluster in the U.S., capacity in Europe, and the launch of its own AI cloud and AI Studio developer environment. As of June 2025, the company has increased its total liabilities to creditors by 4.5 times to $1.3 billion.

Nebius currently has a net to debt ratio of 0.31. Nebius has no plans to significantly increase its debt burden. It follows from Volozh's letter to shareholders that the group intends to finance its expansion mainly from its own capital.

Q2 reporting had a different impact on CoreWeave and Nebius stock performance.

The former's securities collapsed 33%, but traded at nearly three times the initial public offering price. "Right now, CoreWeave is not generating enough profit to pay off all the debt holders, much less the equity holders," analysts at D.A. Davidson explained the collapse.

And Nebius shares rose 36.7% on its second-quarter results. Zacks analysts called this report a blockbuster.

Tech Stock Pros analysts list the following important takeaways from Nebius' reporting:

- the company's cost of revenue fell to 29% of total sales, down from 53% a year earlier. A decrease in this indicator usually means that business efficiency is improving.

- the share of operating expenses as a percentage of revenue decreased from 874% in the second quarter of 2024 to 206% for the same period this year. Expenses themselves grew from $126.7 mln to $216.3 mln, but became more balanced to the rapidly growing revenue.

By comparison, CoreWeave's operating expenses quadrupled year-over-year in the second quarter, from $317.7 million to $1.2 billion.

- The P/S (capitalization to revenue) multiple over the past 12 months shows CoreWeave's high valuation at 14.23, but Nebius has it at an explosive growth rate of 68.98 with an industry median P/S of 3.4.

- The P/B multiple (capitalization to book value ratio) of Nebius is 4.55 versus 13.14 for Coreweave, with a median of 3.61. That is, investors are willing to pay more for the assets of the latter.

- In terms of growth potential, the companies look about the same.

The average target for CoreWeave is now $121.77, giving the paper a potential upside of 18.2% to its closing price on Aug. 29, while Nebius, with an average target of $89.4, has a potential upside of 30.9%.

- Beta, which shows the volatility of the stock, CoreWeave has an estimated value of 2.33 and Nebius has an estimated value of 1.9.

Taken together, we can conclude that the securities of these companies will be of interest to those who believe the hype for AI and cloud services will continue in the coming years, making the companies' spending in scaling their businesses not a waste.

But as Tech Stock Pros analysts note, when comparing the two companies, it's important to note that Nebius is "spreading its eggs into multiple baskets" rather than relying solely on growth in the AI infrastructure sector.

They cite Avride, a startup that makes delivery robots, as one of the company's medium- to long-term growth drivers. It is "scaling rapidly through partnerships with Hyundai, Uber and Grubhub and has targeted niche segments, for example, university campuses," Tech Stock Pros lists.

This means CoreWeave will appeal to investors potentially willing to take more risk, while Nebius will appeal to the more cautious.

This article was AI-translated and verified by a human editor