AI trade far from over as CoreWeave, Nebius surge on outlook

CoreWeave surges on expanding margins and rising backlog.
Nebius Group sees 4x jump in customer commitments.

Clay Webster FXStreet

CoreWeave (CRWV) stock has exploded 21% at the start of trading on Wednesday. The AI cloud computing company beat Wall Street's expectations during its post-market second-quarter earnings release on Tuesday.

CoreWeave reported $-1.14 in GAAP earnings per share (EPS), 33 cents better than consensus. Revenue also narrowly beat the consensus, rising 112% YoY to $2.58 billion. But what has really triggered the Wednesday rally is the rise in CoreWeave's backlog and talk of expanding margins. Q2 saw the revenue backlog increase above $104 billion, but CEO Michael Intrator said that the company had already signed an additional $25 billion in customer commitments in the early weeks of Q3 and that the contribution from this batch was five to ten percentage points better than previous contracts.

While admitting that "near-term capacity was effectively sold out," Intrator said the company remains on track to ramp up from the current 1.5 GW to 8 GW by 2030.

Analysts were enthusiastic with the results.

"We remain positive on CRWV given a strong/diversifying demand backdrop providing a line of sight to meaningful pricing/revenue/margin upside over the medium term as the company transitions from being large scale training GPU compute provider to becoming the AI cloud of choice," wrote Evercore analyst Amit Daryanani.

Evercore retained its $160 price target on CRWV shares, while Wells Fargo hiked its own target by $5 to the same threshold. Truist raised its price target from $126 to $155. The more conservative analysts at Bernstein also raised their price target from $67 to $74, while Barclays hiked their target from $90 to $105.

Nebius witnesses similar success in Europe

Nebius Group (NBIS), the Netherlands-based European counterpart to CoreWeave, also released a shockingly impressive quarterly report. Nebius Group shares have jumped 18% at the time of writing on Wednesday after the company reported Q2 GAAP EPS of -$0.68, or $0.18 better than consensus. Revenue exploded off a low base by $454% YoY to $582 million, besting the consensus by over $8 million.

More importantly, Nebius management upped their forecast for year-end infrastructure by a whole gigawatt to 5 GW. The CEO said total contract value of all deals secured in Q2 quadrupled from the prior quarter, and the contract deals for new customers saw a 9X increase.

What's more, the expected payback period for the current wave of extremely high capex is now one year and ten months compared to the two to three-year payback period announced in Q1.

Nebius and CoreWeave stock charts

Nebius stock has already turned the page with Wednesday's spike. Shares of NBIS surged above the previous lower-high resistance surrounding $230. The jump in the share price has already placed it above the 50-day Simple Moving Average (SMA), a bullish construct if it can hold through the close.

If this rally has staying power, then bulls will hold out for a break of June's previous all-time high just below $300. The long-term trendline gives us a proposed resistance point around $340.

CoreWeave stock has been in a downtrend for the last 14 months, but Wednesday's spike has got to give long-time bag-holders some hope. Now that CoreWeave trades well above the 50-day SMA, and 200-day SMA for that matter, bulls need to see a break above the descending top trendline near $120 for this rally to continue through August.

CoreWeave stock chart daily — CRWV 1-day stock chart

Author

Clay Webster

FXStreet

Clay Webster grew up in the US outside Buffalo, New York and Lancaster, Pennsylvania. He began investing after college following the 2008 financial crisis.

GBP/USD retreats from multi-day highs around 1.3550

GBP/USD now gives away part of the earlier advance toward the 1.3550 region, or multi-week peaks, looking to consolidate around the 1.3530 region on Wednesday. Cable’s continuation of its march north follows the modest downside pressure on the Greenback after US CPI readings matched consensus in July.

EUR/USD eases from tops, back to 1.1550

EUR/USD now surrenders some gains and recedes toward the 1.1550 regio on Wednesday. Despite the knee-jerk, spot keeps the bid tone intact amid the offered stance in the US Dollar, all in the wake of in-line US inflation data in July. However, the fragile landscape in the Middle East is expected to put a floor to the occasional downward trend in the buck.

Gold challenges 10-week highs near $4,450

Gold now pushes harder and climbs to new two-month highs near $4,450 per troy ounce on Wednesday. The yellow metal’s solid performance comes on the back of a weaker US Dollar and declining US Treasuty yields across the curve as investors assess the latest US CPI data.

Ripple lags recovery as exchange reserves expand

Ripple is trading within a broadly constrained technical structure, with support at $1.00 and key moving averages limiting its recovery potential. In August, the remittance token declined by approximately 6.5%, extending its total pullback to around 14% from July's $1.18 peak.

911 million shares freed: Why SpaceX rallied into its own supply

The most heavily trailed supply event of the year landed on August 6, and the SpaceX (SPCX) stock went up. Roughly 911.5 million shares held by insiders and early backers became eligible to trade, around 43% more than the entire float sold at the listing.

9-3: Is the Federal Reserve’s vote tally Warsh's new forward guidance?

The rate did not move. Neither did the statement, and that’s the more interesting fact. Set the July 29 Federal Open Market Committee (FOMC) statement beside the one issued on June 17, and the two documents are identical apart from a single verb and a paragraph at the bottom naming three dissenters.