Better Artificial Intelligence (AI) Stock: CoreWeave vs. Nvidia

Core Viewpoint - The growth of artificial intelligence (AI) infrastructure is creating multiple investment opportunities, with Nvidia being a prominent player in the AI sector for the past two years [1] Company Performance - CoreWeave has recently gained significant attention, with its stock rising approximately 185% in the past month and about 270% since its IPO in late March [2] - Nvidia's stock has increased by 24% during the same period, indicating a slower growth rate compared to CoreWeave [2] - Despite a slowdown in growth, Nvidia's data center sales still saw a 73% year-over-year increase in the most recent fiscal quarter, although the growth rate has slowed to 10% [4][6] AI Demand and Ecosystem - The demand for AI is still on the rise, with Nvidia's ecosystem encompassing advanced GPU and CPU chips, interconnect technologies, and the CUDA software platform, which are integral to various architectures [7] - Nvidia's CEO highlighted the integration of its AI processors in products like Nintendo's new Switch 2 gaming console, showcasing the company's broad customer base [8] Investment Insights - Nvidia holds a stake in CoreWeave and is a significant customer, having purchased 250,000 Nvidia chips for its data center operations [9] - CoreWeave has secured a 15-year lease for 250 megawatts (MW) of power at a new data center, with the option to expand by an additional 150 MW [10][11] - CoreWeave's revenue is heavily reliant on a few customers, with Microsoft accounting for nearly two-thirds of its revenue last year [11] Financial Position - CoreWeave had approximately $5.4 billion in liquidity as of March 31 and raised an additional $2 billion from a debt offering, indicating substantial capital expenditure needs [12] - CoreWeave's stock trades at a high valuation with a price-to-sales (P/S) ratio of about 30, while Nvidia has a price-to-earnings (P/E) ratio of around 30 based on expected profits [13][14] Conclusion - As CoreWeave expands, Nvidia's profits are also expected to grow, positioning Nvidia as a more favorable investment option in the AI sector due to its risk profile and financial stability [15]