Better AI Data Center Stock: Nebius vs. CoreWeave
Key Points
Nebius and CoreWeave are both generating explosive growth.
Both stocks look undervalued relative to their long-term growth potential.
Nebius (NASDAQ: NBIS) and CoreWeave (NASDAQ: CRWV) both reinvented themselves as AI cloud infrastructure providers to capitalize on the AI boom. Nebius was once known as Yandex, which owned Russia's top search engine and its associated cloud-based services. However, recent sanctions prompted it to divest its Russian assets, relocate to the Netherlands, and repurpose its data centers to process AI tasks remotely.
CoreWeave was once an Ethereum miner, but it repurposed its GPUs to handle AI tasks after the cryptocurrency market crashed in 2018. Nebius and CoreWeave both purchased massive quantities of Nvidia's (NASDAQ: NVDA) GPUs to support those transformations. Nvidia also invested in both of these "neocloud" service providers.
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Both of these neocloud stocks have been volatile in this choppy market over the past year. But if the market stabilizes, which stock will generate bigger long-term gains?
Image source: Getty Images.
What do CoreWeave and Nebius do?
CoreWeave operates 51 data centers across North America and Europe, and its servers run on more than 250,000 Nvidia GPUs. Its dedicated cloud-based GPUs can process AI tasks roughly 35 times faster and at 80% lower cost than cloud infrastructure leaders like Amazon Web Services (AWS) and Microsoft Azure.
Nebius only runs four operational data centers in Finland, Iceland, and the United States, but it plans to open 14 more data centers in the near future. Its servers run tens of thousands of GPUs, but it doesn't disclose an exact count.
While CoreWeave mainly helps companies train their large language models (LLMs) and AI algorithms, Nebius provides customized AI services for the data training, edtech, and robotics markets. It also integrates its managed software services into its data centers, making it a more diversified, "full stack" AI infrastructure company than CoreWeave.
Which company is growing faster?
CoreWeave's top customers include Meta Platforms, Microsoft, OpenAI, and Anthropic. At the end of its latest quarter, its contracted revenue backlog swelled 246% year over year to $104 billion -- more than eight times its projected 2026 revenue of $12.9 billion.
Nebius' biggest customers also include Meta and Microsoft. Its contracted backlog more than quadrupled year over year to over $40 billion at the end of the second quarter of 2026. That's more than 12 times its projected 2026 revenue of $3.3 billion.
From 2025 to 2028, analysts expect CoreWeave's revenue and adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) to grow at CAGRs of 101% and 110%, respectively. Yet its stock trades at just seven times this year's adjusted EBITDA.
From 2025 to 2028, analysts expect Nebius' revenue to grow at a 253% CAGR as it expands its data center footprint across five countries. They also expect its adjusted EBITDA to turn positive in 2026 and grow at a 212% CAGR over the next two years. However, it trades at just 15 times next year's adjusted EBITDA.
Why do both stocks seem undervalued?
CoreWeave and Nebius both seem undervalued in this market because investors are concerned about their lack of profits by generally accepted accounting principles (GAAP) and their usage of big debt and secondary share offerings to fund the construction of new data centers. Rising interest rates and a potential slowdown in AI spending could exacerbate that pressure.
But if we look beyond those near-term challenges, CoreWeave and Nebius could have plenty of room to grow as they convert their backlogs into commercial revenues. They've carved out defensible niches in the booming AI market, and they'll continue to grow as long as conventional cloud infrastructure platforms can't satisfy the soaring demands for dedicated AI servers. According to Synergy Research Group, the neocloud market could expand at a 58% CAGR from 2025 to 2031.
If Nebius and CoreWeave stay at the top of that booming market, they could command much higher valuations over the next few years. But if I had to pick one over the other, I'd pick CoreWeave over Nebius because it already has a bigger data center footprint, its business model is simpler, and its stock looks cheaper relative to its growth potential.
Leo Sun has positions in Amazon and Meta Platforms. The Motley Fool has positions in and recommends Amazon, Ethereum, Meta Platforms, Microsoft, and Nvidia. The Motley Fool has a disclosure policy.