CoreWeave: The Undervalued AI Infrastructure Play in a NVIDIA-Dominated Landscape

Clyde MorganSunday, Jun 1, 2025 5:36 am ET
15min read

The AI revolution is fueling a gold rush for companies positioned to power its infrastructure. While

NVIDIA
(NVDA) dominates headlines with its $3.3 trillion valuation, CoreWeave (CWAV) emerges as a stealthy disruptor, offering exponential growth potential at a fraction of the price. With 420% year-over-year revenue growth and a $60 billion market cap, CoreWeave's valuation gap versus NVIDIA creates a compelling risk-reward opportunity for investors willing to look beyond the obvious.

The AI Infrastructure Gold Rush

The AI boom isn't just about algorithms—it's about the hardware, storage, and compute infrastructure that enables them. NVIDIA has been the poster child of this shift, with its data center revenue soaring 427% YoY to $22.6 billion in early 2025. Yet its valuation has priced in nearly every dollar of future AI growth. CoreWeave, by contrast, remains vastly undervalued despite its central role in the ecosystem.

CoreWeave's Explosive Growth Metrics

CoreWeave's Q1 2025 results underscore its breakneck trajectory:
- Revenue: $981.6 million (up 420% YoY), driven by AI cloud demand.
- Adjusted Operating Income: $162.6 million (up 550% YoY), reflecting operational leverage.
- Revenue Backlog: $25.9 billion, including $11.2 billion from OpenAI and IBM partnerships.

The company's adjusted EBITDA margin hit 62%, a stark contrast to NVIDIA's margin compression (73% in Q4 FY25 vs. 75.5% in FY24). CoreWeave's scalability is further amplified by its data center expansion: 420 MW of active power and 1.6 GW contracted power, positioning it to capitalize on the $500 billion Stargate Project and other hyperscaler initiatives.

NVIDIA's Valuation: A Double-Edged Sword

NVIDIA's $3.3 trillion valuation reflects its AI dominance, but this comes at a cost:
- Margin Pressure: Gross margins dipped to 73% in Q4 FY25 from 75.5% in FY24 as costs rise.
- Dependence on AI: 95% of its revenue now comes from the data center segment, leaving little room for error.
- Limited Upside: At a P/S ratio of ~22x (vs. CoreWeave's ~8x), NVIDIA's stock reflects peak expectations.

Even NVIDIA's Q1 FY26 guidance ($43 billion revenue) assumes continued AI demand, but its valuation leaves little room for error. Meanwhile, CoreWeave's smaller size and direct exposure to compute demand create a leverage effect: a 10% increase in AI adoption could disproportionately boost its bottom line.

CoreWeave's Strategic Edge

  1. NVIDIA Partnership Synergy:
    NVIDIA holds 24.2 million CoreWeave shares ($2.5 billion) and relies on its infrastructure to power Blackwell supercomputers. This symbiosis ensures CoreWeave benefits from NVIDIA's AI leadership without competing with it.

  2. Untapped Scalability:
    With $14.7 billion in revenue performance (RPO) and $11.2 billion in committed contracts, CoreWeave's backlog is 40x its annual revenue. This visibility reduces execution risk and positions it to outpace even NVIDIA's growth rates.

  3. Export Restrictions ≠ Demand Decline:
    While U.S. export controls on AI chips have sparked concerns, CoreWeave's data center investments remain robust. Its partnerships with IBM (Granite models) and its acquisition of Weights & Biases highlight its role as an infrastructure enabler—a necessity even amid regulatory turbulence.

The Risk/Reward Equation

CoreWeave isn't without risks. Its $314.6 million net loss (up from $129.2 million YoY) reflects heavy upfront investments. However, its adjusted metrics and backlog suggest these losses are temporary. The real risk lies in overvaluation—yet at $60 billion, CoreWeave trades at ~2% of NVIDIA's valuation despite comparable growth drivers.

For investors seeking high beta exposure to AI infrastructure, CoreWeave offers:
- Leverage to AI Compute Demand: Direct ties to hyperscalers and NVIDIA's ecosystem.
- Margin Expansion Potential: 62% EBITDA margins signal efficiency gains.
- Undiscovered Upside: Minimal institutional ownership (vs. NVIDIA's ~80%) suggests room for re-rating.

Conclusion: Buy the Underdog, Sell the Leader

NVIDIA's $3.3 trillion valuation is a testament to its AI prowess, but it's also a ceiling. CoreWeave's $60 billion market cap, by contrast, is a floor. With 420% revenue growth and a backlog 40x its size, CoreWeave is the AWS of AI infrastructure—a category leader in a niche that's about to go mainstream.

Act now: Buy CoreWeave while its valuation remains disconnected from its growth trajectory. NVIDIA may be the star, but CoreWeave is the engine powering its universe.