Forget Nebius. CoreWeave Has a New Competitor. And It's Not Another AI Cloud Company.

When investors think about CoreWeave's (NASDAQ: CRWV) biggest competitors, names like Amazon, Microsoft, Alphabet, and Nebius probably come to mind.

But one of the most interesting potential competitors doesn't look like a cloud company at all. It builds rockets. And yes, it's Space Exploration Technologies (NASDAQ: SPCX), also known as SpaceX.

That may sound strange. SpaceX is best known for rockets and Starlink, while CoreWeave provides cloud computing for artificial intelligence. But the lines between those businesses are beginning to blur.

SpaceX and its AI ecosystem are building enormous amounts of computing capacity, including massive Nvidia-powered data centers. And that capacity is increasingly being made available to outside customers.

For CoreWeave investors, this matters for a reason that goes beyond losing a few customers -- SpaceX could help change the economics of AI computing itself.

Image source: Getty Images.

CoreWeave is essentially selling computing power

The easiest way to understand CoreWeave is to think of it as a utility for AI.

Companies building advanced AI models need enormous amounts of computing power. Instead of spending billions of dollars building everything themselves, they can rent access to specialized infrastructure from providers such as CoreWeave.

CoreWeave supplies the GPUs, data centers, networking, storage, and software needed to make that computing power available. The business has benefited from a powerful trend: AI demand has grown extremely quickly, while new computing capacity takes time and enormous amounts of money to build.

That imbalance has been good for CoreWeave. For perspective, the tech company grew revenue by 112% in the latest quarter to $2.6 billion while revenue backlog surged 246% to $104 billion.

But it also creates an important question for long-term investors: What happens when the supply of AI computing catches up with demand? That's where SpaceX becomes interesting.

The rocket company is building an AI empire

SpaceX's connection to AI comes largely through xAI and its massive Colossus computing facilities. These data centers have been built to support the enormous computing requirements of AI models and deploy hundreds of thousands of Nvidia GPUs.

But the infrastructure isn't necessarily limited to internal use. SpaceX has also signed agreements to provide computing capacity to outside companies, including major AI players. For perspective, SpaceX announced that it contracted $14.1 billion in computing power to external customers in the latest quarter.

That changes the story. SpaceX isn't simply building computers to support an AI company. It is increasingly becoming part of the AI computing market. And unlike a typical start-up entering the industry, SpaceX brings an unusual collection of advantages.

SpaceX has something most competitors don't

CoreWeave's biggest advantage is specialization. It has focused primarily on AI infrastructure.

SpaceX has a completely different advantage: scale and engineering capability. Building AI infrastructure requires far more than buying Nvidia GPUs. It requires enormous amounts of electricity, suitable land, data centers, cooling systems, networking equipment, and the ability to bring all of it online quickly.

SpaceX has spent years building extremely complex physical infrastructure in industries where failure is not an option. That doesn't automatically make it a better AI cloud provider. But it gives the company an unusual ability to tackle the physical constraints that limit AI computing.

And that could become increasingly important as the industry expands.

CoreWeave still has a powerful weapon

None of this means CoreWeave's investment thesis is broken. In fact, the company has an advantage that's difficult for newcomers to replicate: experience.

Running a massive GPU cluster isn't simply about owning GPUs. Customers need reliable performance, fast deployment, efficient scheduling, high utilization, and software that makes thousands of GPUs work together effectively.

CoreWeave has been building that expertise for years. Its specialization also allows it to focus entirely on AI infrastructure rather than balancing the business against rockets, satellites, or other priorities. Besides, it has developed relationships with major AI customers, positioning it well to expand with these customers.

So the competition may ultimately come down to two very different strengths. SpaceX has scale and engineering firepower. CoreWeave has specialization and AI-cloud expertise.

What CoreWeave investors should watch

This is why four things deserve close attention over the next several years.

The first is pricing. If CoreWeave can maintain attractive pricing as computing supply increases, that's a sign its platform remains differentiated.

The second is GPU utilization. Expensive GPUs only create value when customers are actually using them.

The third is capital efficiency. CoreWeave is spending enormous amounts of money to expand. Investors need to see those investments producing increasingly attractive returns.

And finally, watch customer diversification. A broader customer base would reduce CoreWeave's dependence on a small number of enormous AI customers and strengthen its bargaining position.

If CoreWeave delivers on these four areas, it may signal that the company has built a defensive position against large tech giants like SpaceX and, to an extent, incumbents like Amazon and Alphabet.

Lawrence Nga has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Amazon, Microsoft, and Nvidia. The Motley Fool has a disclosure policy.