To The Moon

🧠 Beyond “Dream Stocks”: Inside the Rise of Neoclouds, CoreWeave, and Nebius

The recent market correction has stripped the shine off many once-glamorous names. Share prices have tumbled, especially for so-called “dream stocks” — companies rich in narrative but light on near-term fundamentals, their success hinging entirely on future execution.

In this climate, investors naturally wonder: are some of these names being unfairly punished?

In my view, Neoclouds — the new generation of AI-focused cloud providers — are not just dream stocks.

Their ascent is grounded in something very real: the explosive, sustained demand for AI computing power. These firms hold genuine technical moats and scarce physical assets — namely, top-tier NVIDIA GPUs. More importantly, leading players such as CoreWeave and Nebius enjoy NVIDIA’s direct backing, securing early access to the world’s most coveted chips.

I’m not suggesting anyone rush to buy. Every investor must do their own research and decide on the right entry. But understanding the landscape — and these two radically different models — helps reveal where the true structural value lies.

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⚙️ CoreWeave: The High-Wire Alchemist

CoreWeave’s expansion model is a masterclass in financial engineering built on one ingenious idea: GPU-backed lending.

Traditionally, IT hardware is a depreciating liability. But NVIDIA’s A100s and H100s have turned that logic upside down — they’ve become “hard currency” in the AI era. CoreWeave has weaponised this shift:

1. Secures demand first: Long-term compute contracts from clients like Microsoft and OpenAI.

2. Leverages the future: Uses those contracts — plus NVIDIA’s supply guarantees — to convince lenders like Blackstone of stable cash flow.

3. Borrows to buy GPUs: Raises billions in loans to purchase chips, pledging those same GPUs as collateral.

4. Rents to repay: Leases the GPUs back to customers, using rental income to service debt.

It’s a brilliant loop — and a risky one. The entire system rests on the assumption that GPU values stay high. If AI demand slows or newer architectures make existing chips obsolete, the debt tower could wobble.

Still, CoreWeave is the only “Platinum-rated” AI cloud in SemiAnalysis’ industry ranking. Its proprietary software stack (like SUNK and Tensorizer) drives GPU utilisation above 50% — far beyond peers.

Investing in CoreWeave is like dancing with a virtuoso tightrope walker: you’re betting its execution stays flawless, its growth outruns its debt, and its technical edge keeps it indispensable to the world’s top AI builders.

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🏰 Nebius: The Fortress of Cash

While CoreWeave spins leverage into growth, Nebius takes the opposite path — cash-rich, low-debt, and disciplined.

Its edge lies in radical cost control. Nebius bypasses OEMs like Dell and Supermicro to work directly with ODMs (original design manufacturers), building custom servers at near-cost. That slashes hardware mark-ups from 10–15% to about 2%, giving Nebius unmatched cost leadership.

As a result, it’s long been dubbed the “price leader” among gold-tier AI infrastructure firms. Nebius returns part of those savings to customers through ultra-competitive pricing and banks the rest — reportedly amassing over a billion dollars in cash reserves.

Its client base is also deliberately diversified: a wide mix of startups, research labs, and enterprises. Its philosophy is democratised AI compute, not dependence on a single mega-customer.

Investing in Nebius is like backing a fortress builder — betting that in a brutal, capital-intensive race, survival strength (zero debt, high cash) will ultimately beat speed.

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💥 The $19.4 Billion Shock That Changed Everything

The turning point came just over a month ago.

Microsoft awarded a US $19.4 billion AI infrastructure contract — not to Azure, not even to CoreWeave, but to Nebius.

That single deal shook the industry and revealed three hard truths:

1. AI demand has outgrown the giants. Azure’s AI business is up 157%, but its backlog now exceeds US $300 billion. Power, space, and chips — all maxed out.

2. Neoclouds have proven their model. Even hyperscalers now need hybrid “build + buy” strategies. Niche, efficient players like Nebius are becoming essential partners.

3. Nebius played its cards perfectly. After landing the deal, it launched a dual funding round — US $2.75 billion in convertibles plus US $1 billion in equity — at rock-bottom rates (1–2.75%) and a 50% conversion premium.

This wasn’t a pivot — it was timing mastery. Nebius waited to use leverage only when markets were begging to fund it, locking in the cheapest “rocket fuel” imaginable.

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⚡ Not a Dream — a Developing Reality

So, when the market sells off, are CoreWeave and Nebius merely “dream stocks”? Hardly.

They meet real, supply-constrained demand that even tech giants can’t fill.

They hold the world’s most strategic resource — NVIDIA’s top-tier GPUs.

Their balance sheets show billions in contracted revenue backlog.

They possess certified technical and cost advantages, validated by independent analysis.

CoreWeave, the high-wire performer, and Nebius, the fortress architect, represent two paths to the same summit — the throne of AI compute. One races with risk; the other endures with resilience.

The market correction may have punctured the hype, but it also cleared the fog. What remains are companies not selling dreams — but building the infrastructure that powers them.

And that, perhaps, is the most fundamental difference between a fantasy — and the future.

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