I'll Remain Long NBIS and Even Grow My Position
$NEBIUS(NBIS)$ and $CoreWeave, Inc.(CRWV)$ growing like crazy shouldn't be surprising.
Satya Nadella publicly explained 6 months ago on a podcast that $MSFT would be leasing a lot of capacity going forward rather than building all itself.
Here is what I think is happening:
These neo-cloud businesses, both $NEBIUS(NBIS)$ and $CoreWeave, Inc.(CRWV)$ , exist solely because $NVIDIA(NVDA)$ wants them to exist.
Nvidia has an equity stake in both companies, and they are both members of the Nvidia Partners Program. Nvidia grants early access to its chips to the partners.
Nvidia does that because it knows all hyperscalers, especially $Microsoft(MSFT)$ and $Amazon.com(AMZN)$ , are racing to develop their own cutting-edge GPUs, as this is their biggest cost in scaling cloud operations.
Nvidia knows that if they are allowed to control the supply, it will prolong the upgrade cycles and reduce orders to gain time to develop its own chips.
This is why it's providing early access to the neo-clouds that are 100% dependent on Nvidia chips. Hyperscalers know that if they delay orders for the fresh capacity, the demand will shift to the neo-clouds that can build capacity fast with the support of $NVIDIA(NVDA)$ .
Thus, NVDA corners hyperscalers and strategically compels them to put new orders and cripples their ability to focus on their own chips.
$Microsoft(MSFT)$ sees this and says, "If this is the case, I'll just lease the capacity from the neo-clouds."
It's basically a strategic response to NVDA. It leases the bulk of their capacity, making them dependent on it. So, if MSFT backs down, they'll have a really hard time staying alive.
There is a small window of opportunity here for neo-clouds.
If they can scale beyond hyperscalers and form a fragmented customer base, they may keep thriving even if hyperscalers reduce leases.
Currently, NBIS has a better shot at it than CRWV, as MSFT already makes up 72% of its revenue.
I am long NBIS, and I have already made 4x of money in the stock.
I'll remain long NBIS and even grow my position, but I'll remain skeptical of $CoreWeave, Inc.(CRWV)$ for its unfavorable strategic position, as I explained above.
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