CoreWeave and Nebius, which rent GPU computing power to AI companies, are benefiting from a supply shortage that allows them to charge higher prices.
Demand from hyperscalers and AI labs continues to outpace available capacity, and older graphics processors are staying productive longer than expected—CoreWeave's Nvidia A100s are contracted through 2029.
Bank of America estimates these tailwinds could add 500 to 1,000 basis points to operating margins for both firms, signaling that GPU infrastructure economics are strengthening faster than predicted.
What happened
AI infrastructure providers CoreWeave and Nebius are commanding higher prices for GPU capacity as demand continues to exceed supply. Older GPUs—including CoreWeave's fleet of Nvidia A100s contracted through 2029—are retaining economic value longer than expected, extending their productive life to at least nine years.
Why it matters
Bank of America estimates the combination of higher pricing and extended hardware life could add 500 to 1,000 basis points to operating margins for both firms. This suggests the economics of GPU-as-a-service providers are improving faster than investors previously anticipated, with pricing power holding steady even as supply constraints ease.
What to watch
CoreWeave is targeting 8 gigawatts of capacity by 2030, while Nebius plans to add more than 1 gigawatt per year starting in 2027. Bank of America maintains Buy ratings on both stocks, with price targets of $140 for CoreWeave and $310 for Nebius.
Ask the AI about this article →
CoreWeave and Nebius operate in a market where GPU supply remains constrained relative to explosive AI demand. Both companies are experiencing significant orders from hyperscalers (large cloud providers) and AI laboratories, which has allowed them to command premium pricing on new GPU capacity. The supply-demand imbalance is durable enough that Bank of America projects pricing power to persist, translating directly into margin expansion.
A secondary but critical dynamic is the extended economic life of older hardware. CoreWeave's A100 GPUs, contracted through 2029, will generate revenue for approximately nine years—far longer than the industry initially assumed as GPU technology appeared to be advancing rapidly. This longer useful life means operators recover their capital investments more gradually, reducing the pressure to write off assets quickly and allowing greater profitability over the asset's full lifecycle. Together, higher pricing and extended hardware retention create a favorable margin environment that may sustain beyond the current supply shortage.
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