Following Nvidia's disclosure that rental prices for its H100 GPU are still increasing, shares of AI cloud service providers Nebius, CoreWeave, and IREN Ltd surged on Thursday. Nebius saw a 15% gain, partly driven by its announcement of an AI infrastructure power supply agreement with Bloom Energy. Over the agreement's term, Nebius will pay a monthly service fee, totaling up to $2.6 billion, for the capacity and electricity of the power system. CoreWeave closed up over 6%, while IREN ended the day with a gain exceeding 10%. Applied Digital surged 21.5% after announcing a long-term data center facility lease agreement with an unnamed hyperscale cloud service provider, involving its newly built high-performance computing campus in Texas, USA. As of Thursday's market close, CoreWeave and IREN have gained over 50% year-to-date, Nebius has surged over 160%, and Applied Digital has risen 96%.
The rise in H100 GPU rental prices has reignited concerns about AI "compute power anxiety." Nvidia's CFO Colette Kress stated on the company's earnings call, "Since the beginning of the year, H100 rental prices have increased by 20%, while A100 cloud service prices have risen by nearly 15%. Thanks to the versatility of our platform and the continuous performance improvements from our software stack, customers can achieve significant returns even after the GPU's depreciation period." Due to sustained high demand for AI GPUs, Nebius recently announced that the on-demand rental price for H100 GPUs will increase from $2.95 per hour to $3.85 per hour.
The H100 GPU, released in April 2022, is part of Nvidia's Hopper series. The company has fully transitioned to production of its Blackwell series GPUs, with the next-generation AI accelerator chip, Vera Rubin, expected to begin production and shipping in the second half of this year. Reports indicate that the Vera Rubin chip targets high-performance computing and large-scale AI training scenarios, with initial customers including major North American cloud service providers like Amazon Web Services and Microsoft Azure. This chip aims to bridge the compute power gap between the existing H100 series and future demands for ultra-large-scale models, further solidifying Nvidia's dominance in the data center AI chip market.
Kress expressed confidence in the company's revenue forecast of $1 trillion combined for Blackwell and Rubin chips from 2025 to 2027. Nvidia's CEO Jensen Huang went further, suggesting that the market performance of the Vera Rubin chip could potentially surpass that of the Blackwell series.
Notably, the global imbalance between AI compute power supply and demand continues to intensify, with "compute power anxiety" becoming a core challenge for leading companies. In March, Elon Musk stated that the compute power needs of his companies, including Tesla and SpaceX, would eventually exceed the total global chip production capacity. To address this, Musk announced plans to build a "Terafab" chip complex in Austin, Texas. Furthermore, SpaceX's recent IPO filing listed "self-production of GPUs" as a "significant capital expenditure project," bringing AI compute power concerns to the forefront.
While the outlook for the compute power rental market appears positive, Wall Street analysts hold divergent views on related stocks. On Thursday, GF Securities initiated coverage on CoreWeave with a "Buy" rating and a $162 price target. GF Securities analyst Michelle Jing wrote in a client note, "With its first-mover GPU deployment, unique focus on the AI sector, industry-leading operational efficiency, and long-term agreements with leading AI hyperscale cloud providers, CoreWeave is positioned to be a long-term winner in the wave of AI infrastructure prosperity."
Conversely, investment bank D.A. Davidson assigned CoreWeave a "Neutral" rating, lowering its price target from $175 to $100, and also gave Nebius a "Neutral" rating with a $250 price target. D.A. Davidson analyst Gil Luria stated that the firm's stance on CoreWeave has undergone a polar shift and maintaining neutrality reflects a balanced judgment. On one hand, the compute power industry's prospects are favorable, and CoreWeave has become a key player. On the other hand, its relatively weak margins, high dependence on debt financing, questionable profitability realization, and insider selling warrant caution.
The valuation logic for Nebius differs. Luria believes it deserves a premium valuation, but short-term upside potential is limited. "Since initial coverage over a year ago, Nebius's stock has significantly outperformed the broader market, evolving from a peripheral player to a core asset in AI trading. Its current premium is justified but also likely to constrain near-term gains."
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