CoreWeave CEO sends blunt message to Nvidia stock investors

Nvidia (NVDA) stock investors have laughed all the way to the bank over the past three years, as the company has crushed the AI chip space.

CoreWeave (CRWV) CEO Michael Intrator, however, just laid out why that incredible level of dominance requires consistent defense. 

In a recent CNBC interview, Intrator said Nvidia is “covering their bases” with its prescient AI infrastructure partnerships to ensure its customers have access to enough compute. 

Being on top of its game is imperative, though, because according to CompaniesMarketCap, Nvidia is now worth north of $5.30 trillion, and any misstep opens the door further for Advanced Micro Devices (AMD) to gain a bigger slice of the pie.

For perspective, nearly three years ago, around May 2023, Nvidia’s market cap hovered at around $750 billion, Statista noted. So, it has surged more than sevenfold since then, driven by relentless demand for AI chips.

Intrator’s comments follow Nvidia’s latest deal with IREN, adding another layer to its broader strategy. 

IREN will partner with the AI chip giant to deploy approximately 5 gigawatts of DSX-branded AI infrastructure across its data center platform. 

Additionally, Nvidia secures the right to acquire up to 30 million IREN shares at $70 each over a period of five years, with a total investment value of $2.1 billion.

The deal joins a long list of moves where Nvidia is pursuing a dual-pronged strategy, selling chips while also ensuring the infrastructure around them scales quickly enough to keep clients locked in.

Nvidia stock returns vs. CoreWeaveOver the past month, Nvidia stock gained 16.33%, compared with a 12.45% gain for CoreWeave.Over the past three months, it gained 15.47%, compared with CoreWeave’s 20.55%.Over the past six months, it gained 13.62%, compared with CoreWeave’s 29.77%.Over the past nine months, it gained 20.55%, while CoreWeave fell 17.94%.Year to date, it gained 17.67%, compared with CoreWeave’s 60.17%.Over the past year, it gained 88.16%, compared with CoreWeave’s 123.28%.
Source: Seeking Alpha

CoreWeave CEO warned Nvidia must expand AI capacity quickly or risk losing customers to AMD.

Chris J. Ratcliffe/Bloomberg via Getty Images

CoreWeave CEO flags Nvidia’s next test 

Intrator’s comments frame Nvidia’s story in a completely new way.

The obvious angle is the one investors have been chasing for years: whether demand for Nvidia’s AI chips remains robust. Clearly, it does.

Intrator, though, feels that the bigger question now is whether Nvidia could help broaden the AI ecosystem so it can keep the bulk of AI demand on its own platform. 

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Nvidia’s lead is clearly massive, but its clients care a lot about availability, deployment speeds, and costs at the same time.

If Nvidia-led capacity is tight, its client base might want to consider AMD as an alternative.

For perspective, AMD’s latest quarterly figures back that possibility up in a big way.

Q1 revenue for the chip giant surged 38% from the prior-year period to $10.25 billion, while adjusted EPS hit $1.37. 

Perhaps what’s more important is that data-center sales skyrocketed 57% to a record $5.8 billion, spearheaded by EPYC processors and Instinct GPU shipments. 

Additionally, AMD guided for superb Q2 revenue of $11.2 billion, comfortably above market expectations, with server CPU sales expected to rise by more than 70%.

At this point, it seems Nvidia realizes that a two-sided setup and the IREN deal showcase it perfectly. However, on the flip side, these partnerships are incredibly expensive, and it’s a massive cost for Nvidia to keep its lead intact. 

For Nvidia to continue on an upward trajectory, it needs to keep scaling its chips, and if it can’t, it’s likely to be penalized by the stock market.

The market is already paying a steep premium for the chipmaker’s stock.

According to Seeking Alpha, the stock is trading at 26 times forward non-GAAP earnings, which is 41% higher than its five-year average.

Additionally, it is trading at 28 times forward cash flow, 40% above its five-year average. 

So Nvidia needs to keep the momentum going, and even though earnings estimates support its bull case, nothing is certain, especially given the heated debate around AI from both sides of the spectrum.

Nvidia is building the AI toll road 

Nvidia is arguably selling the most important chips in AI, but as I mentioned earlier, its strategy does not stop there.

In addition, the tech behemoth is looking to ensure that the roads, power lines, data centers, and networking pipes around those chips are built quickly enough.

The new partnership with IREN is just the latest in a long list of recent deals Nvidia has made, with some of the biggest including:

OpenAI: OpenAI revealed that its massive $110 billion funding round included $30 billion from Nvidia, while securing next-gen inference compute with the chipmaker.Corning: Nvidia’s Corning partnership aims to expand optical connectivity capacity for AI data centers, with Corning planning a 10-fold boost in manufacturing capacity.Lumentum and Coherent: Nvidia committed $2 billion each to the optics players in backing R&D, capacity, and future AI data-center networking needs.Intel: Nvidia’s $5 billion stake in Intel gives it another path into AI infrastructure and chip-platform development.Wall Street price targets for Nvidia and CoreWeaveNvidia
Wells Fargo $315

JPMorgan $265

Goldman Sachs $250

UBS $245
CoreWeave
Cantor Fitzgerald $167

Wells Fargo $155

Bank of America $140

JPMorgan $105

Related: Bank of America tweaks CoreWeave stock price target for 2026

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