Nebius, CoreWeave Are Cashing In on Soaring AI Compute Prices
We got a reminder about the frothiness of demand for AI capacity right now from executives at two small Nvidia-backed cloud firms, CoreWeave and Nebius, speaking on earnings calls in the past two days. Nebius CEO Arkady Volozh revealed today that Nebius had held its first auction of computing capacity during the second quarter, with prices for Nvidia’s Blackwell generation of chips “15% above the highest price we ever charged before.” Volozh also said Nebius was selling more capacity closer to the time customers needed it to take advantage of high prices.
We heard a similar story from CoreWeave, whose CEO, Michael Intrator, told analysts on Tuesday evening that “pricing and margins for our Blackwell and [later-generation] Vera Rubin” chips were “setting new highs, while pricing for prior-generation [chips] is at or above where it was years ago.” CoreWeave raised prices 25% in July “in response to the current demand environment,” said CoreWeave finance chief Nitin Agrawal. CoreWeave is also looking to do short-term deals to take advantage of higher prices.
CoreWeave executives called out this pricing dynamic as bullish for the company’s business model. “We are more confident than ever in the long-term ROI [return on investment] of our product,” Agrawal said. Wall Street agreed. CoreWeave rose 19% on Wednesday, while Nebius stock soared 34%. Both companies are bleeding money in their data center expansion, but investors don’t care right now. As MoffettNathanson analyst Nick Del Deo said in a report on Tuesday, “pricing has captured the market’s attention of late.”
The pricing phenomenon may also account for some of SpaceX’s recent recovery—its stock rose 9.7% on Wednesday to $146.15, 35% above where it was last week. SpaceX led the way on short-term high-priced deals when it rented capacity to Anthropic and Google in the past few months. BNP Paribas noted on Wednesday that the pricing Nebius got on short-term deals lately were “roughly equivalent to the economics of SpaceX’s recently signed deals.”
Despite Wall Street’s applause, it’s easy to overinterpret the significance of high prices for compute capacity. All that’s happening is that it’s hard to find the capacity you need right now. Executives at both companies made it clear that prices are higher for short-term deals—as Volozh described it, “for customers with an immediate time-bounded need.” Companies signing deals lasting several years aren’t paying the same premium.
That makes sense: No one would pay a premium for capacity they need in 2029, say, because by then there will likely be more data centers than there are now (even with the political opposition in many states). The cloud industry is, after all, spending hundreds of billions to expand capacity. Investors might want to take a slightly longer-term view of CoreWeave and Nebius.