Nebius Is Growing 454% - But That’s Not Even the Bull Case

What's up guys? You're listening to Milk Road and I want to tell you that today's video has actually aired before on our channel, but we thought that this conversation was so good that we should air it twice. So, this is a little excerpt from a past conversation. And just a reminder that if you want to see what our analysts are calling next across AI stocks and crypto, all of that is in Milk Road Pro at the link below. Enjoy the video. Can we just get right to the companies, too? Cuz I think, you know, this is all nice to hear and and I think if people dig into the the businesses, they'll eventually find a lot of these numbers. And it's great to see a lot of the big firms like A16Z kind of projecting this, right? But I think inevitably, uh people listening want to pick winners, right? And maybe they'll basket Coreweave and Nebius together, which isn't the worst play, either, I'm assuming. But I think it's worth noting that they are they are still different companies with different P&Ls and um I think we want to learn a little bit more about them today. >> Of course, let's start with Coreweave. So, Coreweave uh posted a revenue like about a week and a half ago. Um results were exceptional. Revenue of $2.5 billion, up 112% year-over-year. And if you actually go to the next slide, if you look at um Coreweave's uh backlog, their backlog has exploded over the last year. It went from roughly 25.9 billion in Q1 2025 to um 104 uh billion in Q2 2026 as of now, meaning they just 4x their, you know, um cloud capacity or not contracted RPO in five quarters. And the biggest jump came in Q3 of 2025, which grew 84.7% uh quarter-over-quarter. Um and then in 2026, it jumped another 48%. And the 1.4 billion that I mentioned does not even include the 25 billion in net new customer commitments that they added in the first few weeks of Q3. So, the backlog is actually higher. And now, to put that 1.4 billion dollars in context, Coreweave roughly has a market cap of 50 billion dollars right now. Meaning the backlog is roughly 2x the value of the company depending on, you know, um how the price moves up. Uh but obviously the backlog is not the same as like the profit, right? And that for the 104 billion will be recognized over multiple years, but it just shows you how much AI demand Coreweave has already locked in. >> How much how much confidence do we have in that 104 billion? Like I know it's I know and I guess it's a bigger question about all these these CapEx commitments, right? But it's like how much confidence are we supposed to have in that? Like is that guaranteed? >> I would bet because we have >> Money's held in escrow somewhere, you know what >> [laughter] >> I mean? Like it's definitely going to be paid out. >> Because earnings are going because all these um commitments are coming from hyperscalers, their earnings are going up. You know, I have yet to see a somebody back out of a deal, actually, for these commitments. Um if you look at companies like SpaceX and uh SpaceX specifically, they actually sign short-term deals in their contract where they have the ability to back back off these contracts, but these companies necessarily don't. They're not signing those type of deals as SpaceX. So, I would say majority I would be shocked if these if all of this I I I don't want to say all of it if most of it don't come through. So, what what I think cuz I have not seen anyone back out of these deals just yet because we have no compute. >> How much how much do these guys have to spend to actually fulfill that, though? Right? Like is that something that's just waiting for their current facilities or they have to build more? >> Uh current and they already they already locked in all the supply and most of the supply that they need. But this is over a course of like 3 to 5 years. So, they the build-outs still need to happen for them to, you know, obviously um have for this to happen. I'll give you an example. Um Nebius is a good example of this. They have a Vineland facility that they're building out, and uh their commitment for this year was approximately like 1 GW approximately um of delivered power, and Vineland is like 30% of it. They just got approved to build a phase two of it like last week. So, yes. So, the like the buildout still needs to happen for this to all work out. So, the biggest bottleneck, like what like yesterday we talked about is power, you know, that that is what determines whether if all these going to, you know, be able to essentially get built out. >> Mhm. Yeah, that makes sense. So, actually, I I don't know if you want to mention talk about this slide. It's going to what I was asking about their spending, uh but I do want to talk about Nebius. >> Yes, absolutely. I do want to touch about the bear case here about Coreweave uh because their Q2 like as I mentioned before, these companies are not yet profitable. Um because if you look at the chart, their Q2 2026 um revenue was 2.6. They spent 7.1 billion in CapEx. Um they also pay 640 million in quarterly interest expense, Coreweave specifically, with a net loss of 626 billion million. Um they also have a CapEx of uh 35 to 39 billion dollars this year. So, essentially, what I'm trying to say is Coreweave is roughly spending three to every dollar of it earns right now. And the model works, and the operating leverage is clearly emerging, but this is a huge problem because if something happens with rates, you know, if the rates goes up, that 626 million dollars will be massively higher um if there's an interest hike, and then this in order for all this to happen, we need the build-out to continue, and that is also, um, you know, up in the air sometime like depending on facility you're trying to build out and all the power you need. So, um, that is the that is the risk that you have with Core We right now. >> Just going to pause there for a second to point out that the market [clears throat] is showing signs of something kind of different happening. And our analysts at Milk Road Pro are all over it. They spent the last couple weeks making a lot of trades, getting out of some positions, and then getting into a lot of new ones, getting ready for the next wave of robotics space, or even kind of picking some different AI winners. If you want to see what they have in their portfolios, what position is there opening, it's just a dollar in Milk Road Pro at the link below. >> You know, one thing we've talked about a lot on this show is that crypto is quickly becoming a huge part of the global payments infrastructure, and nowhere is that more obvious than in Asia. But if you're actually running a remittance company or a payment business, you know that the hard part isn't moving the stable coins, it's dealing with local banking partners, compliance, liquidity, and all of the operational headaches that come with sending money into places like India and Southeast Asia. That's why today's partner is Sabre. They give payment companies stable coin-powered infrastructure to collect and make payouts across Asia without having to build all of that complexity themselves. They've already processed more than $3 billion in transactions across 40 different countries, so this isn't just a concept, these guys are actually doing this for real. If you're building payment infrastructure or expanding into Asia, make sure you check out Sabre.money. >> Mhm. Tell me about Nebius, man. Nebius has been your your darling uh for months now. So, how do they compare to this? They don't they don't make as much money, right? Uh we saw that earlier in the slide. They make like a 20% as much, but uh clearly the market really likes them. >> Yes, the market loves them because, um, because if you look at this chart, this is one of the underappreciated, um, data point in the entire uh Neo Cloud space right now, because Nebius has 5.9 billion deferred and unearned revenue on his balance sheet as of June. 5 billion of that is non-asset non-current, meaning customers have already paid Navitas for services that have not been delivered for more than 12 months. So, this is the same like thing that I, you know, talked to you guys about like LTAs, like long-term agreements, where customers are willing to give you money beforehand, and then, you know, you do the build-out, and then, you know, you can supply them. And customers have already wired Navitas $5 billion for compute, um and this is essentially interest-free $5 billion loan from customers who are not so scared of getting computer access in the future, so they're essentially paying now. So, >> Yeah, but wouldn't them getting paid in such an advance, wouldn't that make you bearish on the price, though? That like wouldn't they already be reporting that in their earnings? Like that they already have the money, isn't that isn't that isn't that bad for the numbers? That it's like, well, they already got a lot of the money, versus somebody like CoreWeave, it's like that's not reflected yet, that payment. >> What Navitas does in their earnings call, they do something called sandbagging. This is uh This is essentially what a lot of companies do. They purposely lower expectations, or lower, you know, how much revenue that they're going to bring in, because they want to keep on beating earnings, you know, you know, over time. This is This has been the core message, or core theme for Navitas for like three, four quarters now. And everyone's like been calling them out on this. And that that that that is the reason I I think that's the reason why we're not like these numbers, I believe, should be much, much higher. They don't want to give you the actual numbers, because they marketize consistency. Market don't want you growing, let's say, 500, 800%, whatever it is, and then, next quarter, you the the growth fell off, and your stock is going to get demolished 30, 40% because of it. So, you want consistent growth, and I think that's what Navitas has shown um across the market right now, and because they are the fastest growing as of right now. >> So, with that in mind, what how is the market pricing each of these? Like, which one is it pricing more aggressively? >> It's definitely Nebius, for sure. Because if you look at that that chart, um that chart compares how expensive each stock is relative to its sales and how fast the revenue is growing. Nebius is in the upper right, trading about 36.7 um and last 12 months of sales, while revenue grew 454% year-over-year. Core Weave trades at roughly 12.6x um its revenue growth is lower at, you know 112%. Um Iron trades at 21.x, while Digital is Applied Digital is at 21.2x. Um so, basically, Nebius is the most expensive in the group, but investors are willing to pay that premium because it's growing the fastest. And if I if you asked me is this justified? And I would say the answer is yes. This is completely justified because of their growth trajectory, they have a killer team. They have Actually, if you don't know the story behind um Nebius, you should look that up. It's a great story. They actually have a, you know, they actually used to own a uh business in um Russia, Google of Russia, actually. They, you know, disbanded during the war and all the engineers, you know, they had engineers with them for, you know, 10 decade-long engineers came with them to build out Nebius. So, they have a killer team. They also own like bunch of other businesses line. Um they're they have a ride-sharing business. They have ClickHouse. They have all these different business line that Core Weave doesn't have. That's why the market is pricing it. Market likes to price companies that are ahead of its curve. And Nebius is ahead of its curve. And if you want an example of that, when Kimi K3 got released on day like within the first day, well, few days after, Nebius was one of the first ones to bring that out in the market. And they Arcadi, which is like the CEO, has said 100 like previously on um in an interview that when the deep deep fake moment happened back in, you know 2020 like last year or sometime, but essentially when deep fake released the models, that was like, you know, 100x cheaper, right? Everybody started going crazy, but that was when they had the best sales. Nebius actually had the best sales when deep fake moment happened. And then Kimmy K3 moment happened where basically they caught up to the frontier models, and I bet you they're about to have an insane insane revenue growth because of Kimmy K3 demand and open source models. >> Right. And I feel like there's one of these on this chart that is lagging and catch up soon. But I think we'll save that for Milk Road Pro members. Uh for people that want to know more. Uh I guess the last question, last thing we want to talk about here, Melvin, uh is SpaceX. As kind of like that's the elephant in the room. I know that's your old joke, but really like >> [laughter] >> they're way bigger than any of these companies. So, how do they how do they fit into this? >> Thanks for listening [music] to Milk Road. If you enjoyed the show, make sure you like and subscribe. And if you're struggling to find winners in the market, that's exactly what Milk Road Pro is built [music] for. Our analysts have called some of the biggest winners early, and Pro lets you see what they're buying next, every trade they make, and the research [music] behind every position. Check out Milk Road Pro at the link below. Everything you hear on Milk Road is for informational purposes only. These are our personal opinions, not financial advice, and we may own some of the investments we talk about. Always do your own research and make the decisions that are right for you. See you next time.