D.A. Davidson has signaled a tempered view on two high-profile companies in the AI infrastructure space, assigning Neutral ratings to both Nebius Group and CoreWeave while underscoring that long-term demand for AI compute remains robust.
In research notes released Monday, analyst Gil Luria described the long-term market opportunity for artificial intelligence cloud computing as constructive for both firms. Nevertheless, the reports emphasize that current market valuations and a set of operational and financial risks constrain appreciation in the near term.
Nebius: Execution lauded, valuation seen as a near-term cap
D.A. Davidson initiated coverage on Nebius with a Neutral rating and a $250 price target after the stock’s substantial runup over the prior year. The report commends Nebius’ execution, capital discipline and a diversified AI cloud strategy, calling the company "the best executing public AI cloud." The note highlights Nebius’ balanced customer mix and comparatively stronger balance sheet, noting minimal net debt and flexibility to pursue additional growth.
The firm also identified incremental value tied to Nebius-owned assets such as Avride and ClickHouse. Financial projections included in the research foresee Nebius revenue climbing from about $534 million in 2025 to $3.36 billion in 2026 and rising above $10.6 billion in 2027.
Despite these projections and operational strengths, Davidson warned that Nebius is trading at about a 30% premium to its backlog, which the firm believes limits short-term upside for the stock even with healthy fundamentals.
CoreWeave: Growth tempered by low margins and leverage concerns
The brokerage also initiated coverage on CoreWeave with a Neutral rating, reducing its price target to $100 from $175. While acknowledging CoreWeave’s growing role within the AI infrastructure ecosystem, the report calls attention to several headwinds.
Davidson notes that CoreWeave has diversified customer exposure beyond early strategic partners such as NVIDIA and Microsoft, adding relationships with OpenAI and Meta. That reduced concentration risk is a positive, the note says, but the company is still characterized as one of the least profitable public AI cloud providers.
The research cites adjusted EBIT margins of roughly 1% on a revenue run rate annualized to $8 billion. With memory and broader infrastructure costs rising, Davidson warned margins could come under further pressure because long-term customer contracts may not adequately hedge against future component price increases.
Revenue estimates in the report project CoreWeave generating nearly $13 billion in 2026 and exceeding $25 billion in 2027, but Davidson expects the company to remain heavily leveraged. The firm highlighted blended borrowing costs above 9%, and it flagged insider selling as an additional concern. These factors underpin Davidson’s view that CoreWeave should trade at a discount to Nebius when judged by backlog-based valuation metrics.
Analyst view in context
Overall, Davidson’s notes present a consistent theme: both Nebius and CoreWeave are well positioned to benefit from secular demand in AI computing, yet different constraints - Nebius’ elevated valuation relative to backlog and CoreWeave’s slim margins and higher leverage - limit the stocks' short-term upside. The brokerage’s stance reflects a balance between conviction in long-term market growth and caution about current financial and valuation-related risks.