Sam Badawi
Overspending on Datacenters? NBIS CRWV IREN DD
10/22/2025, 1:04:05 AM
Economic Summary
- The AI/accelerated-computing wave (GPU/accelerated workloads led by NVDA demand) began after ChatGPT and has driven exponential, multi-year demand for data-center capacity, specialized co-location, and accelerated hardware; buildouts will take years, sustaining strong CapEx cycles for hyperscalers and partners.
- Hyperscalers (e.g., MSFT, AMZN, GOOGL) continue very large CapEx but also generate strong free cash flowāexamples cited: Microsoft >$64B CapEx and ~$72B FCF, Alphabet ~$67B FCF, Meta ~$50B FCFāsupporting continued infrastructure investment and long-term demand for third-party capacity providers.
- Smaller specialized providers (NEBBIUS, COREWEAVE, IREN) are signing multi-year contracts with hyperscalers and repurposing existing assets, creating steep revenue S-curves; however, those contracts and capacity ramp timelines mean revenue recognition and profitability will be multi-year and variable by geography.
Bullish
- Hyperscalers' AI demand forces outsourcing to specialized data-center builders, driving multi-year revenue S-curves.
- Microsoft's $17.4B contract validates Nebbius' model and long-term revenue visibility.
- Amazon's AWS, advertising, and robotics growth generate strong cash flows, supporting continued CapEx and demand.
Bearish
- High valuations and rapid share-price runs create significant downside risk and volatility for small data-center names.
- Triple-digit revenue growth rates (e.g., IREN) are likely unsustainable as the business matures.
- Buildouts take years; supply could catch up with demand, compressing margins and growth expectations.
Bullish tickers
MSFTAMZNNVDANEBBIUSCOREWEAVEIREN
Bearish tickers
NEBBIUSIRENCOREWEAVE
NEBBIUS
3 price targets
703020
Bullish
Signed a reported $17.4B multi-year deal with Microsoft, vertically integrated stack ownership, and decades of infrastructure experience.
Bearish
Shares have run hard and remain volatile; large upside expectations are already priced in and could reverse on execution delays.
COREWEAVE
Bullish
Provides specialized AI co-location and has been tapped by hyperscalers to meet GPU-heavy workloads.
Bearish
High recent share-price appreciation and execution risk; depends on continued hyperscaler demand and disclosure of counterparties.
IREN
Bullish
Low energy costs, vertical stack ownership, and rapid planned gigawatt-scale capacity expansion support AI and cloud demand.
Bearish
Triple-digit growth rates are unlikely to persist forever; execution needed to meet aggressive gigawatt build plans.
MSFT
Bullish
Hyperscaler demand and large cloud contracts underpin multi-year capacity needs; Microsoft is a major customer driving third-party provider growth.
Bearish
Large CapEx commitments expose it to buildout timing risk and macro uncertainty.
AMZN
Bullish
AWS, advertising, and robotics provide high-margin growth levers; AWS cash generation supports continued investment and margin expansion.
Bearish
E-commerce margin pressure could limit some upside in overall company margins.
NVDA
Bullish
NVIDIA GPUs are core to accelerated computing demand powering the current AI buildout.
Bearish
Significant share-price appreciation increases downside risk despite strong fundamental demand.
GOOGL
Bullish
Alphabet/Google is a hyperscaler that must secure massive compute, driving market for data-center builders and co-location.
Bearish
Large-scale commitments to third-party capacity could raise execution complexity.
META
Bullish
Large R&D and AI work increases demand for data-center capacity and cloud services.
APLD
Bullish
Applied Digital has signed deals and is part of the data-center buildout ecosystem.
MELI
Bullish
MercadoLibre benefits from huge untapped e-commerce growth in Latin America, similar playbook to Amazon.
WMT
Bullish
High top-line sales make Walmart a massive revenue generator but with thinner e-commerce margins than Amazon.
URA
Bullish
ETF exposure suggested for diversified access to nuclear-related companies amid energy demand narrative.
People mentioned
SamAndy JassyJeff BezosMatt GarmanSatya NadellaSundar PichaiDan RobertsTanner