I Compared CRWV and NBIS — The Winner Was Obvious❗

About this video

• Video Title: I Compared CRWV and NBIS — The Winner Was Obvious❗
• Channel: Jerry Romine Stocks
• Speakers: Jerry Romine
• Duration: 13:10

Overview

This video compares two AI infrastructure companies, Coreweave (CRWV) and Nebius (NBIS), analyzing their recent earnings reports and business models to determine which is the stronger investment. The speaker argues that despite similarities in their focus on AI infrastructure, their fundamental differences in strategy, financial health, and long-term viability make one a clearer winner.

Key takeaways

• Misconception of Similarity: Investors often treat Coreweave and Nebius as the same type of business, but their recent earnings reports highlight significant differences.
• Coreweave's Business Model: Focuses on renting out high-end GPUs to power AI, with a large backlog but a recent margin collapse and significant cash burn.
• Nebius's Business Model: Builds a full stack including compute, software, and orchestration, with internal verticals and a focus on product stickiness, demonstrating better margin control and efficiency.
• Financial Performance Discrepancy: While both companies are growing rapidly, Coreweave's gross margins have plummeted to 2%, and its net income margin is negative, indicating potential fragility. Nebius, though also loss-making, shows improving margins and a more disciplined approach to scaling.
• Contractual Moats: Coreweave has a massive backlog ($55.6 billion), but its contracts lack true stickiness as they primarily offer GPU access. Nebius, with smaller contracts, is building deeper customer integration through platform support and custom deployments, creating a stronger "bind."
• Market Reaction: Both stocks dropped after earnings, signaling market skepticism beyond surface-level growth, with institutions prioritizing durability and execution over hype.
• Speaker's Recommendation: The speaker is bullish on Nebius due to its stronger fundamental position, efficiency, and developing business model, while remaining cautious on Coreweave due to its high burn rate, margin issues, and lack of a strong software moat, despite its impressive backlog.