(Bloomberg) — One year after CoreWeave Inc.’s tumultuous initial public offering the stock is being trounced by rival neocloud provider Nebius Group NV.
The reason has nothing to do with the companies’ products or competitive outlooks. Instead, the divergence is being driven by the very 2026 concern weighing on so many technology stocks: heavy spending on artificial intelligence.
“CoreWeave for some time has underperformed Nebius, not because of the differentiation that its business model is risky compared to Nebius, it’s just that Nebius has a pretty clean balance sheet,” said Paul Meeks, head of technology research at Freedom Capital Markets, who covers Coreweave and Nebius and has buy ratings on both. “It hasn’t gone as far as CoreWeave on the building of the infrastructure.”
Both companies are neocloud providers, meaning they offer specialized high-performance computing infrastructure for AI hyperscalers such as Alphabet Inc. and Microsoft Corp. But the divergence between the stocks’ performance has been stark.
“They’re wholly reliant on a few hyperscaler contracts to get investors excited,” said Felix Wang, tech sector head at Hedgeye Risk Management, who has a short rating on Coreweave.
Since going public on March 27, CoreWeave shares are up more than 100%, rising from its $40 in its first day of trading to more than $80 today, although the ride has been far from smooth, with the stock down about 55% from a high of nearly $184 in June. Meanwhile, Nebius shares have risen about 350% since Coreweave’s IPO and are just 16% away from their October record. The disparity is particularly acute this month, with Nebius leaping 26% in March, while CoreWeave has gained just over 4%.
For CoreWeave, it’s been a rocky first year in the market, starting with its IPO. The company had expected to raise $2.7 billion in the offering but was forced to downsize to $1.5 billion. Nvidia Corp., which was an early investor, had to anchor the sale with an order of roughly $250 million. CoreWeave Chief Executive Officer Michael Intrator said the chipmaker’s involvement was integral to getting the deal done.
Within months, the shares were soaring as investors bought into companies that were primed to benefit from increased spending on AI. CoreWeave also had an agreement worth as much as $4 billion to rent out computing power to OpenAI, which Wall Street applauded.
But the enthusiasm quickly gave way to concern due to its heavy spending on AI, supply constraints and delays in building at least one data center. By the end of 2025, CoreWeave shares were trading for $71.61 — and they have held in a range below $115 ever since.
Debt Skepticism
This is not to say that Nebius has escaped scrutiny over its debt. The stock fell 10% on March 17 when the company announced a private offering of convertible senior notes worth $3.75 billion, in part to finance data center construction. The announcement came just a day after it reached a $27 billion partnership arrangement with Meta Platforms Inc. and about a week after agreeing to a $2 billion deal with Nvidia.
The pattern of investors selling on spending announcements is likely to continue for both companies, which need to expand capacity to meet demand.
“In order for neoclouds to reach sustainable profitability, they will need to differentiate and build asset-light, margin accretive offerings on top of their infrastructure solutions as they will require financing in order to fund their AI infrastructure build-outs — we don’t believe the convertible notes will be a one-off event, but rather a necessary financing to fund capex,” Truist analysts led by Arvind Ramnani wrote in a March 23 note to clients.
While both companies are unprofitable, CoreWeave is deeper in the hole, with an expected loss of roughly $1.7 billion this year compared with Nebius’s $660 million. However, CoreWeave’s revenue is projected to be $12.5 billion in 2026, about four times Nebius’s estimated sales, according to data compiled by Bloomberg.
Analysts anticipate that neither will turn an annual profit until 2028, and there are fears that neoclouds could become less necessary as hyperscalers are able to bring more of their own computing infrastructure online.
Without those contracts the companies look far less viable, according to Hedgeye’s Wang. “You take them away, they have no business model, they can’t scale up and they have enormous capex costs,” he said.
Still, Wall Street is bullish on both, although the sentiment is clearly better for Nebius. Of the 14 analysts covering the company, 11 have buy ratings and none rate it a sell, and its average price target suggests a 50% gain over the next 12 months. For CoreWeave, 20 of the 35 analysts covering the company rate it a buy and three have sell ratings. The 12-month price target implies the stock will rise 43%.
The pivotal moment for the companies, and the neocloud industry as a whole, should arrive in 2027, just before analysts expect the firms to become profitable.
“All these names will get re-rated and the stocks will go much higher once people start to get wind of the inflection for the entire industry in 2027,” Freedom Capital’s Meeks said.
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–With assistance from Subrat Patnaik and David Watkins.
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