re: Nebius - NBIS - AI Infrastructure Company

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"We've delivered an outstanding start to 2025 on multiple fronts. Our strong first quarter financial performance caps a string of milestones including our IPO, our major strategic deal with OpenAI as well as other customer wins, our acquisition of Weights & Biases and many technical achievements," said Michael Intrator, CoreWeave's co-founder and Chief Executive Officer. "Demand for our platform is robust and accelerating as AI leaders seek the highly performant AI cloud infrastructure required for the most advanced applications. We are scaling as fast as possible to capture that demand. The future runs on CoreWeave."

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1. Engineering Resources: In-House Hardware Design

As we discussed before, a core differentiator for $NBIS is its deep bench of engineering talent and full-stack control of its infrastructure. While both companies invest in GPU clusters, $NBIS designs its own hardware, including racks purpose-built in collaboration with NVIDIA for next-gen chips.

Engineering capability is often underestimated, but it is the cornerstone of durable infrastructure efficiency. The quality of Nebius’ hardware design will matter more over time as generational leaps in GPU performance compress replacement cycles and make poor hardware decisions more costly.

2. Infrastructure Model: Mostly Reseller vs. Vertically Integrated Operator

CoreWeave doesn’t own its infrastructure assets apart from GPUs, it focuses on renting colocation space (using third party data centers) to scale rapidly. While this accelerates go-to-market speed, it comes at a cost: greater reliance on third parties, limited hardware control, and increased exposure to power, cooling, and connectivity constraints in shared data centers.

$NBIS, by contrast, pursues vertical integration:

• It builds and owns most of its infrastructure.
• It designs hyperscale data centers from the ground up, with AI workloads in mind.
• It optimizes rack-to-chip performance and power utilization holistically.

This control over infrastructure allows $NBIS to scale incrementally and efficiently while mitigating external risks. By owning the stack, it also avoids the rent escalations and logistical bottlenecks that often plague GPU resellers.

The result: better uptime, lower latency, and reduced cost per unit of compute — benefits $NBIS can either retain as margin or pass to customers.

3. Growth Strategy: Disciplined Scaling vs. Debt-Fueled Expansion

By designing and building its own data centers, $NBIS can fully leverage its hardware optimizations. More importantly, its modular architecture allows it to scale capacity gradually, based on demand — a stark contrast to CoreWeave’s aggressive expansion.

CoreWeave rushed to build capacity as fast as possible to secure large customers like Microsoft. While this strategy enabled rapid growth, it also left the company burdened with over $8B in debt. This gets even more riskier when that debt is secured against its GPUs, a fairly fast depreciating asset that brings high financing costs.

In contrast, $NBIS follows a pragmatic and financially disciplined approach, avoiding overbuilding infrastructure that could remain underutilized. With $2.4B in cash and no debt, the company is in a far stronger financial position. While $NBIS does plan to raise additional capital to support its expansion, the exact approach remains uncertain. The company could opt for share dilution, potentially through a private placement with strategic investors, as it did with Nvidia in December. Alternatively, it could raise capital via debt financing or by selling a stake in one of its subsidiaries. Regardless of the method, any new funding is expected to be strategic and beneficial for long-term growth, especially as it would mean that demand continues to boom (otherwise, $NBIS wouldn’t need more than its current cash pile).

This approach reduces downside risk, especially in a capital-intensive sector where missteps can be existential. CoreWeave, on the other hand, is far more vulnerable to market disruptions.

4. Customer Base and Revenue Concentration

CoreWeave relies heavily on large-scale AI clients, with Microsoft accounting for 62% of its revenue in 2024. This dependence on a single customer introduces significant risks, especially as Microsoft ramps up its own infrastructure investments.

$NBIS, on the other hand, has a more diversified approach, targeting a broad range of customers, from small startups and developers to large enterprises. This gives the company a more stable revenue base, as it’s not reliant on one anchor client. For smaller businesses, $NBIS offers flexible, scalable AI cloud solutions, enabling them to access powerful compute resources without large upfront costs. At the same time, $NBIS also provides customized, high-performance infrastructure for larger enterprises that need tailored AI solutions.

Additionally, and as explained before, $NBIS focuses on developer experience, with tools like Nebius AI Studio simplifying AI workload deployment. This customer-centric approach makes it appealing to both emerging companies and established businesses, strengthening its long-term market position while reducing exposure to risks from any single client. In contrast, CoreWeave’s focus on GPU-centric infrastructure for high-end workloads limits its customer pool to a narrower segment, mainly large enterprises with substantial budgets and specific needs.

Both Nebius and CoreWeave are positioned to benefit from the AI infrastructure boom, but they are executing fundamentally different playbooks.

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Yep i dont think i can make good on my steak and lobster offer bayoubengals. Someone said at the beginning they already did this with standard lithium and thus decided to stay out. Wish i had been so wise. FML

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For those who downvoted my post above, forgive me. I'm an LSU baseball fan...

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