Better Cloud AI Pick: CoreWeave or Nebius Group?

Artificial intelligence (AI) cloud computing is known as neocloud computing, and this sector is home to some of the fastest-growing stocks in the market. Two notable ones in this sector are Nebius (NASDAQ: NBIS) and CoreWeave (NASDAQ: CRWV). Each of these is putting up incredible growth figures and is likely to do so for some time.

But which is the better buy between the two? Let's take a look.

Image source: Getty Images.

Each company has a similar client base

Both CoreWeave and Nebius are taking similar approaches to the same problem. Many of the AI hyperscalers, including ones that have their own cloud computing offerings, need as much computing power as quickly as they can get it. They don't want to overextend themselves by borrowing money and spending even more than they already are on AI computing power.

Instead, they're contracting some power out to other companies like Nebius and CoreWeave. This places these two in a precarious situation. They must continue to maintain their contracts with AI hyperscalers as they build out more computing power; otherwise, their business model is in jeopardy. However, considering the massive amount of AI workloads that has yet to come, I don't think this will be an issue.

There is also significant client overlap between Nebius and CoreWeave, as each of them has notable contracts with Microsoft and Meta Platforms. Furthermore, both companies are backed by Nvidia. Having partnerships with two of the largest AI hyperscalers and being backed by the largest computing unit provider is insight into how the industry thinks about these two. I think the backing by Nvidia is all investors really need to know, as Nvidia wouldn't invest in them if it thought that it could get a greater return elsewhere.

That makes these two legitimate investments, but which is the best?

Nebius is growing faster

Both companies are delivering impressive results. During the second quarter, CoreWeave's growth rate was 112%. It's hard to top a growth rate like that, but Nebius easily flies past it. During Q2, its growth rate was a jaw-dropping 454%. That's way faster than CoreWeave's, and that is expected to continue for some time as well.

For all of 2026 and into 2027, Wall Street analysts expect CoreWeave's revenue growth rate to be 151% and 104%, respectively. These are strong growth rates, but once again, they're outdone by Nebius. For 2026 and 2027, Wall Street expects 530% growth and 269% growth.

Despite Nebius' faster growth rates, Wall Street expects $12.3 billion in revenue at the end of 2027, while CoreWeave's will be $26.3 billion. So, CoreWeave has a significant head start there on Nebius. However, that's not reflected in the valuations. Despite being smaller in projected revenue by the end of next year, Wall Street valued Nebius at a higher level than CoreWeave.

CRWV Market Cap data by YCharts.

So, if you're looking at this from a pure value-focused investment strategy, then CoreWeave makes more sense. However, there's one more thing to consider: profitability. Neither of these two companies is profitable in any form. They are borrowing money to build out their computing infrastructure and do not care about profits right now. However, CoreWeave is far closer to breaking even than Nebius is.

CRWV Operating Margin (Quarterly) data by YCharts.

As a result, CoreWeave may look like the better buy. Nebius is a fantastic company with strong growth ahead, but there are a lot of high expectations baked in. CoreWeave is already larger and nearly breaking even, so it seems like the better pick here.

However, one thing investors need to keep in mind with both of these stocks is just how risky they are. There's no saying these two will be able to reach profitability and become viable companies. There is execution risk here, and if either one of them slips up, they could go to $0. However, if they pan out, each will be able to provide major upside compared to today's levels.

Keithen Drury has positions in Meta Platforms, Microsoft, Nebius Group, and Nvidia. The Motley Fool has positions in and recommends Meta Platforms, Microsoft, and Nvidia. The Motley Fool has a disclosure policy.