This year, the remarkable rise of CoreWeave (CRWV) and Nvidia (NVDA) has been a topic of interest. Initially hot stocks on the market, their values have more than tripled in just a few months. In a stunning turnaround, a stock that once soared high has recovered from a significant drop to achieve the status of the first company worldwide valued at $4 trillion.
Those who recognized the promising prospects of these two artificial intelligence (AI) shares have been richly compensated. However, it’s challenging to determine which one offers a more advantageous investment opportunity at present.
Two growth superstars
For some time now, those who have kept tabs on Nvidia have grown accustomed to impressive growth. This graphics processing unit (GPU) manufacturer’s progress shows no signs of slowing down. In the initial quarter of fiscal year 2026, Nvidia announced revenue of approximately $44.1 billion – a staggering 69% increase compared to the same period the previous year.
Nvidia’s Q1 earnings grew by 26% compared to last year, but this growth rate was significantly lower than the increase in its revenue. Interestingly, the main reason for this slower growth was a substantial decrease of nearly 18% in its gross margin year over year. Despite this, the growth still appears impressive.
Looking ahead, it appears that positive developments are in store for Nvidia. Their latest Blackwell chips are flying off the shelves at an impressive rate. This surge in sales is expected to boost the profitability of these graphics processors (GPUs), ultimately lifting their overall gross margins. On top of this, the U.S. government has lifted restrictions on Nvidia’s H20 GPUs sales to China. The previous ban resulted in a $4.5 billion charge that negatively affected their gross margins.
In its initial quarter as a public entity, CoreWeave announced revenue of a striking $981.6 million, marking a massive year-on-year increase of 420%. The overwhelming demand for CoreWeave’s AI cloud infrastructure has left the company racing to meet this high level of interest.
At the close of Q1, CoreWeave’s anticipated future income amounted to a staggering $25.9 billion. Notably, this total includes an agreement worth $11.2 billion with the creators of ChatGPT, OpenAI, contributing significantly to that sum.
Despite the fact that CoreWeave is yet to turn a profit, its increased spending on expanding capacity to meet growing demand has negatively impacted its financial position. However, it’s worth noting that when adjusting for interest, taxes, depreciation, and amortization (EBITDA), the company’s performance appears more favorable. In Q1 alone, CoreWeave’s adjusted EBITDA increased by an impressive 477% compared to the same period last year, reaching $606 million.
The valuation conundrum
Generally, a common criticism of rapidly growing stocks is that their values may become overly expensive, making them hard to manage. Upon initial examination, it appears that both CoreWeave and Nvidia might fit this description.
Due to persistent losses in CoreWeave’s earnings, traditional valuation methods using profits aren’t applicable to their stock. At first glance, the company’s high price-to-sales (P/S) ratio of over 21 seems costly. However, if CoreWeave maintains its current revenue growth rate, that multiple will appear more reasonable in the near future, even as the stock price increases.
Among the “Magnificent Seven” stocks, only Tesla has a higher forward price-to-earnings (P/E) ratio than Nvidia’s current 38.6. Additionally, Nvidia’s price-to-sales (P/S) ratio of 28.7 surpasses that of CoreWeave. Generally speaking, Nvidia’s shares are considered overpriced based on standard valuation measures.
When considering those valuation metrics, it’s essential to keep the company’s potential growth in perspective. Nvidia’s valuation appears less intimidating if the demand for their graphics processors continues to thrive.
Better AI stock?
In my opinion, when it comes to the AI sector, Nvidia outshines its competitor due to its impressive profitability. Their graphics processors (GPUs) are considered the top-tier choice for creating and deploying artificial intelligence models. Despite facing competition, Nvidia maintains its lead through constant innovation, ensuring their chips stay ahead of the technological curve.
To put it simply, I find CoreWeve’s business approach quite favorable. Their GPU pricing is significantly lower than major competitors like Amazon Web Services, Microsoft Azure, and Google Cloud by Alphabet, making them a compelling choice for organizations aiming to develop AI applications in the cloud market.
Should artificial intelligence (AI) market growth stagnate, CoreWeave could face significantly higher risks compared to Nvidia. If you’re concerned about this scenario, it might be wiser to invest in Nvidia. However, if you anticipate that AI demand will persist and even increase, I believe CoreWeave has a greater potential for growth than Nvidia.
The choice between these two AI stocks for purchase at this moment hinges on your perspective regarding the future of AI demand. Given my positive outlook, I believe that CoreWeave may have a greater potential for growth compared to Nvidia in the coming years.
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2025-07-22 01:12