The market held its breath last week before the IPO of CoreWeave (Nasdaq: CRWV), an artificial intelligence servers company that is benefitting from the rush of technology giants such as OpenAI and Meta to buy graphics processors and storage capacity. CoreWeave had to compromise on its valuation, cutting it from $47 billion to $34 billion, and it raised only half of the amount that it originally planned. One of the reasons for the disappointment over the company was its heavy losses, some $800 million last year, and huge debt of $8 billion.
Analysts are now pointing to another company active in the same market, one already listed, that is reporting steady growth and operates almost without debt, namely Nebius (Nasdaq: NBIS), which is managed by an Israeli team of former senior managers at Yandex, and is partly based in Israel.
Nebius was founded in 1989 by Arkady Volozh, founder of the "Russian Google," Yandex. Volozh took a courageous stand against President Vladimir Putin on the Ukraine war, and has lived in Israel since the Russian invasion of the Crimea in 2014. After he was practically forced to sell his holdings in the search engine and taxi-hailing service in Russia to Putin cronies, Volozh founded Nebius together with former Yandex CEO Elena Bunina, who also immigrated to Israel. Nebius is now a company that builds server farms or rents areas in existing server farms and in turn leases them to technology companies. Serial entrepreneur Kira Radinsky is a director of Nebius.
To put space between himself and the Putin regime, Volozh built Nebius from the beginning as a Dutch-Israeli company, and it is traded on Nasdaq, using the stock market shell company through which the Russian company was formerly traded, until trading in it was halted after the Russian invasion of Ukraine. At first, that didn’t work: the Italian government refused to let Nebius do business because of the fear of a connection with Russia. In the past year, however, thanks to the global hunger for AI and growing procurement of servers to process it, the company has prospered.
Several analysts have waxed enthusiastic about Nebius recently as an alternative to CoreWeave. D.A. Davidson & Co. analyst Alexander Platt sees the company as a player that is growing rapidly but at a more rational pace and more methodically, without borrowing a lot of money.
Nebius had revenue of $118 million last year, more than half of it from leasing server farms based on Nvidia processors, which is CoreWeave’s field of business. The latter is bigger, with revenue of $2 billion from customers such as Meta, Microsoft, and OpenAI, and it has a higher growth rate than Nebius, but, as mentioned, it has $8 billion debt. Nebius, on the other hand, has $2.5 billion cash that it inherited from Yandex, and debt of just $6 million.
The two companies have a shareholder in common, namely Nvidia, which holds 1% of Nebius and 6% of CoreWeave (before the IPO). In a private placement last December, Nebius raised a total of $700 million from other investors, among them venture capital firm Accel.
Nebius sells to smaller customers than CoreWeave, generally little-known technology companies. The expected fall in the cost of processing language models after the revolution wrought by DeepSeek, however, is causing many industry players to look for cheaper server farm space. In order to attract customers initially, Nebius offered lower-priced service, and it would appear that this has not cost it a significant loss of profitability.
Another advantage that Nebius has over CoreWeave is its focus on software and cloud services, and the long experience of the Yandex cloud team, which was already considered one of the best in the world in the company’s previous incarnation.
Published by Globes, Israel business news - en.globes.co.il - on April 1, 2025.
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