CoreWeave (CRWV) and Nebius Group (NBIS) are specialized AI cloud infrastructure providers often referred to as neoclouds or GPU hyperscalers. Unlike legacy cloud providers like Amazon Web Services (AWS), Microsoft Azure, and Google Cloud, which were designed for web servers and enterprise IT, Nebius and CoreWeave build cloud infrastructure engineered specifically for high-density AI training. The two leading AI infrastructure companies reported earnings this week that impressed Wall Street. Following their earnings releases, CoreWeave shares jumped nearly 20% while Nebius shares bolted 34%. Below are 5 reasons their runs are just beginning, including:
Revenue Growth & Massive Backlog
CoreWeave and Nebius are experiencing insatiable demand for their AI infrastructure offerings. For instance, Nebius’s Q2 revenues exploded by a mind-boggling 454% year-over-year. Meanwhile, Zacks Consensus Analyst Estimates project that demand will continue through 2027. Below are the Zacks Consensus Estimates for Nebius revenue:
Image Source: Zacks Investment Research
In addition, both companies ended Q2 with massive backlogs. For example, CoreWeave’s revenue backlog has grown by 246% year-over-year (this figure excludes $25B+ in net new customer commitments added in early Q3).
Image Source: CoreWeave
To put things in perspective, CoreWeave’s $104 billion backlog is nearly double its current market cap.
Useful Life Bear Thesis Debunked
Noted short seller Michael Burry and other AI bears have argued that the NVIDIA (NVDA) GPUs that fill CoreWeave and Nebius data centers have a useful life of roughly 3-5 years. However, the CoreWeave earnings call debunked the bear thesis. According to CoreWeave, NVIDIA A100 GPUs, released in 2020, now have a useful life of at least 9 years (directly countering Burry’s thesis). This means far less hardware depreciation than most Wall Street analysts project.
NVIDIA Vera Rubin Deployments
CoreWeave and Nebius are leading the AI industry in deploying NVIDIA’s next-generation ‘Vera Rubin’ architecture. Vera Rubin is the most powerful agentic AI platform. Because both companies have close partnerships with NVIDIA, they will not need to join the standard hyperscaler lines to deploy this technology and will be first to market.
Profit Margins are Expanding
While both CRWV and NBIS remain unprofitable due to massive one-time front-loaded costs, recent data show that profit margins are expanding. Contracts in Q2 reportedly have 5-10% higher margins than prior quarters.
Post Earnings Drift & Trapped Shorts
Large post-EPS price moves on heavy volume are indicative of institutional accumulation. For example, Wednesday, NBIS shares jumped 34% as volume reached its highest level in history.
Image Source: TradingView
Meanwhile, Michael Burry and other trapped shorts are likely to be forced to cover their shares, adding fuel to the fire.
Bottom Line
CoreWeave and Nebius Group’s results illustrate that purpose-built AI infrastructure is the engine of the AI supercycle. Because of their multi-year backlog visibility, extended hardware lifespans, and direct access to NVIDIA’s newest chips, their moves are likely just beginning.
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