CRWV vs. MSFT: Which AI Infrastructure Stock is the Better Bet?

Yahoo

25-06-2025

CoreWeave CRWV and Microsoft Corporation MSFT both offer cloud infrastructure services for AI workloads. CoreWeave provides GPU-accelerated infrastructure for AI. Its cloud platform has been developed to scale, support and accelerate GenAI. Microsoft is both a major customer of CRWV and a competitor through Azure's AI services.
So, if an investor wants to make a smart buy in the AI infrastructure space, which stock stands out? Let us delve a little deeper into the companies' strengths and weaknesses to see which is the better stock pick.
CRWV works with NVIDIA Corporation NVDA to implement the latter's GPU technologies at scale. CoreWeave was one of the first cloud providers to deliver NVIDIA H100, H200 and GH200 clusters into production for AI workloads. The company's cloud services are also optimized for NVIDIA GB200 NVL72 rack-scale systems. CoreWeave now has a data center network with 33 data centers across the United States and Europe, supported by 420 megawatts of active power.
CRWV is witnessing explosive revenue growth on strong AI demand. In the last earnings call, management highlighted that AI is forecasted to have a global economic impact of $20 trillion by 2030, while the total addressable market is anticipated to increase to $400 billion by 2028. In the last reported quarter, revenues of $981.6 million beat the Zacks Consensus Estimate by 15.2% and jumped 420% year over year. Apart from scaling capacity and getting adequate financing for infrastructure, CRWV is also expanding its go-to-market capabilities. Moreover, the buyout of the Weights and Biases acquisition has added 1,400 AI labs and enterprises as clients for CoreWeave.
CRWV's strong backlog of $25.9 billion underscores its growing market share. This includes a strategic partnership with OpenAI for about $11.9 billion, while adding several new enterprise customers and a hyperscaler client. It has signed expansion agreements with many customers, including a $4 billion expansion with a big AI-enterprise customer. CRWV added that the $4 billion expansion agreement signed with a big AI client will be reflected in revenue backlog beginning in the current quarter.
Nonetheless, the competitive landscape is the biggest concern. Also, higher capex can be a concern if revenues do not keep up the required pace to sustain such high capital intensity. CRWV expects capex to be between $20 billion and $23 billion for 2025 due to accelerated investment in the platform to meet customer demand. The company now guides interest expense to remain elevated, at $260-$300 million in the current quarter.
CoreWeave's 77% of total revenues in 2024 came from the top two customers. This intense customer concentration is a major risk, especially if the client migrates, the revenue impact could be material. Apart from this evolving trade policy, macro uncertainty and volatility remain additional headwinds.
Microsoft is one of the dominant names in the AI infrastructure space with its Azure platform, which also boasts a global data center coverage. Azure's increased availability in more than 60 announced regions globally is further strengthening the company's competitive position in the cloud computing market.
Microsoft is investing aggressively in AI infrastructure, including building its own custom AI chips like Azure Maia and Azure Cobalt. In the last reported quarter, the company spent $21.4 billion on capex. It paid $16.7 billion for PP&E. MSFT highlighted that nearly half of the cloud and AI-related spend was on long-lived assets that will support monetization over the next 15 years and more. The remainder focused on servers (CPUs and GPUs) to fulfill rising AI demand, including a $315 billion customer backlog. Looking ahead to fiscal 2026, capex will grow at a slower rate than fiscal 2025, with a higher share of short-lived assets.
Microsoft is the exclusive cloud provider to OpenAI, with all workloads hosted on the Azure platform. Its exclusive partnership with OpenAI gives Azure cloud priority access to leading AI models like GPT-4 Turbo, and DALL·E 3. MSFT is also embedding OpenAI's models directly into its services like Copilot, Azure and Bing. This vertical integration is aimed at creating cross-selling opportunities, allowing Microsoft to monetize AI across the stack.
Another interesting development is Microsoft's NLWeb project which aims to turn websites into AI-powered applications. This open-source approach could drive adoption of Microsoft's underlying AI infrastructure while creating network effects that benefit the Azure platform.
Microsoft projects revenues between $28.75 billion and $29.05 billion for the fourth quarter of fiscal 2025 for Intelligent Cloud, while for Azure, it expects revenue growth at constant currency between 34% and 35%. In Enterprise Services, revenues are forecasted to grow in mid-to-high single digits. Nonetheless, the competitive landscape remains a concern.
In the past month, CRWV has skyrocketed 69% while MSFT is up 8%.
Image Source: Zacks Investment Research
MSFT currently carries a Zacks Rank #3 (Hold) while CoreWeave has a Zacks Rank #4 (Sell). In terms of Zacks Rank, MSFT appears to be the better pick at present.
You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
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