Piper Sandler Initiates CoreWeave at Overweight, Nebius at Neutral
N.R. Finch
Piper Sandler initiated coverage on two AI cloud infrastructure companies — Overweight on CoreWeave with a $151 target, Neutral on Nebius at $224. Same sector, two different risk-reward calls; the dividing line is execution certainty.
What is "Megawatt Mania"?
Piper Sandler brands the current AI compute build-out "Megawatt Mania" — data-center expansion is now measured in power consumption (megawatts), not just chip counts.
This means → the AI compute race has shifted from "who has the fastest chip" to "who can build the biggest power-and-cooling footprint fastest."
The firm projects the global AI compute market will hit $109 billion by 2029, growing at a 56% CAGR. Total global AI compute capacity is expected to increase sixfold over the coming years.
Same sector — why does CoreWeave get the higher rating?
Analyst James Fish's core call: both companies will benefit significantly, but CoreWeave offers the better risk-reward at current valuations.
CoreWeave's edge rests on two pillars. First, its proprietary software orchestration stack SUNK — a platform that schedules and manages GPU compute — lowers costs and enables multi-cloud deployment. Second, long-term contracts and financing arrangements mitigate debt risk.
In plain terms = CoreWeave is not just "a GPU rental shop." Its software layer makes compute cheaper and more flexible for clients, and locked-in contracts make cash flow more predictable.
The analyst believes the Street's mid-term financial and megawatt forecasts for CoreWeave are still too conservative, leaving room for upward revisions.
Over 40% cheaper than hyperscalers — how?
Piper Sandler notes that CoreWeave and Nebius both have deep partnerships with Nvidia and run purpose-built infrastructure designed solely for AI workloads, pushing costs and pricing more than 40% below traditional hyperscale cloud providers.
This means → they are not competing head-on with AWS or Azure on general-purpose cloud. They are cutting into a niche — dedicated AI compute — at a lower price point.
Notably, some of those same hyperscalers are also their customers — a sign that even the largest cloud providers cannot build AI capacity fast enough in-house.
What makes Nebius's business model attractive?
Nebius takes an asset-light expansion approach: it designs its own servers and rack hardware, and offers an end-to-end product stack including the Soperator platform and Token Factory toolchain.
In plain terms = Nebius does not just sell compute. It builds everything from hardware to software tooling itself, and funds expansion partly with customer prepayments — building its infrastructure on other people's money.
Piper Sandler's bullish estimate sees Nebius reaching an annualized revenue run rate above $25 billion by 2028.
So why only Neutral on Nebius?
The direct reason: Nebius's hyperscale data-center project in Vineland, New Jersey, faces local community opposition.
The project, developed by DataOne for Nebius, is part of a $17.4–19.4 billion infrastructure agreement between Nebius and Microsoft. Local authorities will hold a special meeting on August 5 to discuss the plans.
This means → the analyst is not bearish on Nebius's business model itself, but whether this critical project can move forward will determine whether earnings projections are achievable. Until that uncertainty clears, the rating stays at Neutral.
Content is for reference only, not financial advice.