NEXTDC or Coreweave, which is the better long-term Investment

Two Roads to Data Dominance

Many investors, particularly those focused on growth and technology, already understand that data and the infrastructure supporting it have become a core driver of long term value creation. We agree with that view, but we think the more interesting question now is where that value ultimately compounds most effectively.

In Australia, NextDC (ASX:NXT) has built a clear leadership position in domestic data centre development, benefiting from scale, prime locations, and strong enterprise demand.

In the US, CoreWeave (NASDAQ:CRWV) is taking a different path, aggressively expanding capacity through deep partnerships tied directly to AI workloads and accelerated computing. When we look at these two models side by side, the choice is not about which story sounds better, but which business structure offers the more durable long term hold.

One leans toward steady infrastructure led returns, the other toward faster but more execution sensitive growth. That distinction matters for investors thinking beyond the next cycle and into how data demand truly compounds over time.

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NextDC Extends Growth Run, Contracted Utilisation Hits 412MW

Starting with NextDC, the company announced today that contracted utilisation has increased to 412 MW, up 30% from its December 1 update. This is a meaningful signal that commercial momentum continues to build, with more customer contracts being signed and converted into committed capacity.

Importantly, FY26 guidance remains unchanged, suggesting management sees this uplift as supportive rather than exceptional. NextDC delivered A$427M in revenue this year, and any disclosure around backlog and contracted capacity matters because the market values this business on future billings rather than near term earnings.

That helps explain why the stock moved up 7% on the announcement, as investors clearly reacted to improved visibility on future revenue.

NextDC Builds Ahead of Demand

Like CoreWeave, NextDC is deliberately building capacity ahead of demand, reflecting management’s confidence in sustained data centre growth.

We see the logic, but it is not without risk. Demand conditions can tighten, forecasting errors can emerge, and hyperscalers are already committing large amounts of capital to their own infrastructure.

NextDC has invested around A$1.7B into capex and commissioning, which raises the bar for utilisation to remain strong.

On profitability, the business does appear to be approaching an inflection point. Operating income reached A$30M, while net income was still negative at A$60M.

Free cash flow also remains negative due to the scale of ongoing investment. In our view, this is not a red flag, but it does reinforce that profitability will take time. The path is there, but execution and demand follow through will be critical for long term value creation.

CoreWeave’s Growth Story Is Undeniable, But So Is Its Debt Risk.

CoreWeave additionally delivered a very strong quarter, generating US$1.4B in revenue and reporting a revenue backlog of roughly US$56B as at September 30.

On the surface, those numbers clearly reinforce the scale and momentum of the platform. However, what stood is what sits beneath that growth. While the latest results did not highlight customer concentration, in 2024 just two customers accounted for 77% of total revenue.

That is a meaningful concentration risk that investors should not overlook. In practical terms, as demand for CoreWeave’s services has accelerated, the company has relied heavily on debt to fund rapid expansion.

That approach can work exceptionally well in a strong demand environment, but with such a narrow hyperscaler customer base, any slowdown or contract change would flow straight through to the balance sheet.

We still find the growth story compelling, but the rising leverage materially raises the stakes. For investors, this becomes less about believing in AI demand and more about being comfortable with how much financial risk sits behind that belief.

NextDC Holds the Financial High Ground

Looking at NextDC’s ASX NXT balance sheet presents a moderately healthy picture. The company carries around A$1.1B in debt and holds approximately A$244M in cash. Based on historical cash burn, that equates to less than one year of runway, which we view as a manageable but real risk, particularly while capex continues to run ahead of demand. In a softer macro environment, raising capital can become more difficult for capital intensive technology businesses. That said, when we compare this position with CoreWeave, the contrast is clear.

Despite CoreWeave’s strong revenue momentum, it is expanding capacity with a debt load now roughly three times larger than its equity base.

This materially increases financial risk and makes future capital raising highly likely, especially given the business remains cash flow negative. We have already seen warning signs, with credit insurers lifting default insurance costs by 7.9%.

From a financial health perspective, we see NextDC as the more conservative and structurally safer option, while CoreWeave offers higher upside but with significantly higher balance sheet risk.

What should Investors take away from this article

The goal of this article is to present a balanced view of both the upside and the risks across each business. We believe investors should remain opportunistic around the strength in backlog capacity, demand visibility, and rapidly growing revenues at both companies.

At the same time, it is important to acknowledge that each is investing heavily in new capacity that has not yet fully translated into revenue, while debt levels continue to rise.

This risk is more pronounced at CoreWeave, where balance sheet leverage remains elevated as the business continues to burn cash. Taking this into account, our view is that NextDC represents a more conservative growth option at this stage, while CoreWeave offers higher potential returns but with meaningfully higher financial risk.