CRWV vs IREN vs NBIS: Which Neocloud Stock To Bet On After Q3 Reports Allay Durability Fears

• Nebius delivered the fastest pace of sales growth in the group, with the top line growing 571% to $981 million.
• Overhangs, including AI stocks pullback, Nvidia fallout, and delays in data centers, remain.
• Retail sentiment was ‘extremely bullish’ for CRWV and IREN, and ‘bearish’ for IREN on Friday.

The AI boom is billed as a huge opportunity for neocloud operators, but building the capacity to meet demand is proving an expensive race against time. 

The latest quarterly earnings reports from CoreWeave (CRWV) and smaller rival Nebius (NBIS) offered fresh evidence that demand for cloud services remains robust, even as the companies, including Iren (IREN), take on more debt to build new data centers. Delays in bringing new capacity online are becoming a headache as well.

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In the last quarter, Nebius delivered the fastest pace of sales growth in the group, with the topline growing 571% to $981 million, while CoreWeave’s revenue rose 168% to $3.66 billion. CoreWeave’s backlog or future orders climbed to a staggering $133 billion.
 

Meanwhile, total liabilities with the companies also rose at a fast clip. However, the pace of growth dipped at least for CoreWeave and Nebius, offering investors some respite.

CoreWeave addressed the debt concerns. “Our growth is supported by multiple sources of funding, including financing backed by customer contracts, operating cash flow, and approximately $9 billion in customer prepayments and deposits expected in the next three months,” CEO Michael Intrator said on the analyst call earlier this week. 

“That financial flexibility positions us to keep delivering the infrastructure and software customers need to build, run, and scale AI.” 

Still, the broader pullback in AI-linked stocks in recent months, the departure of Nvidia CEO Jensen Huang, certain data center delays at Nebius and Iren, and the cautious stance of the incoming Democrat-led Congress on AI remain overhangs.

Neocloud Landscape, Recent Concerns

CoreWeave, the biggest neocloud firm, as well as Nebius and IREN, are loss-making on a net basis. That’s understandable given the ongoing investment and expansion cycle, but investors have begun watching the pace of cost increases more closely.

Nebius and IREN are newer players on the block, having recently pivoted their businesses toward cloud computing, and are currently building capacity to fulfill the first major orders they have secured. For them, the key yardstick is how quickly and efficiently they can deliver on those commitments.

Nebius has a five-year, $12 billion AI infrastructure deal with Meta Platforms (META), while IREN has a $9.7 billion, five-year GPU cloud contract with Microsoft. 

Fueled by surging demand for cloud services, neocloud stocks rallied for much of the year. But over the past two months, sentiment has weakened amid doubts about the durability of Big Tech’s cloud spending, neocloud companies’ debt-fueled business models and a broader retreat from AI stocks.

Timely Capacity Expansion In Focus

Debt aside, timely expansion and delivery of cloud capacity have also emerged as key concerns. Nebius lowered their full-year revenue forecast due to expansion delays.

Nebius said some third-party capacity, including at its Vineland site in New Jersey, is behind schedule after site operator DataOne wound down temporary power sooner than expected. Nebius is ramping up Bloom Energy power to fill the gap. 

It shifted some capacity to the second quarter of 2027, but said it has not been canceled. 

Piper Sandler lowered its price target on NBIS to $148 from $185, while lowered it to $200 from $340 due to the said delays.

IREN said its target of more than $4 billion in operating ARR has shifted from year-end to January, and could slip to late February if suppliers are late. 

The delay reflects a network upgrade Microsoft requested after Horizon 1 was handed over, along with equipment needed to complete commissioning. Notably, Microsoft spent a lower amount on capital expenditures last quarter due to the delay from Iren’s end.

Analysts See Neocloud Stocks Doubling

Despite the pullback in recent months, analysts are overwhelmingly bullish on the sector. They expect all three stocks, CRWV, NBIS, and IREN, to more than double in the next 12 months. 
 

Source: Koyfin

On Stocktwits, the latest retail sentiment reading was ‘extremely bullish’ for CRWV and IREN, and ‘bearish’ for IREN. Notably, Nebius shares have gained 54% so far this year, while CoreWeave and Iren shares are in the red.

For updates and corrections, email newsroom[at]stocktwits[dot]com.

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