Big Tech Companies Jockey for LLM Supremacy
By now, Wall Street investors are well aware of the race for artificial intelligence supremacy among America’s most decorated big tech companies. In late 2022, the AI race jump-started when OpenAI (which partnered with Microsoft (MSFT) released ChatGPT. Within months, the ChatGPT large language model (LLM) became the fastest-growing consumer application in history, surpassing the leaders of the internet boom. However, after OpenAI started with a commanding lead, other big tech companies like Alphabet (GOOGL) (Gemini) have optimized their platforms, invested billions in CAPEX, and are playing catch-up. How will the cutthroat AI LLM race end?
Like the internet mania of the late 1990s, the ultimate LLM leaders will be difficult to predict. For instance, Yahoo! was once the dominant internet search provider until Google came along. Netscape Navigator dominated the web browser domain before Microsoft’s Internet Explorer surpassed it.
AI: Why You Should Buy the “Picks and Shovels” Stocks
Although picking the ultimate leader in the LLM race will undoubtedly be lucrative for investors, it is not necessary in order to cash in on the AI revolution. Instead, investors can vie for the “pick and shovels” plays. Remember, during the California Gold Rush of the mid-19th century, the merchants who sold picks, shovels, and jeans to gold miners often made more more consistent profits than the miners themselves.
CoreWeave: A Leading AI Cloud Infrastructure Provider
Zacks Rank #3 (Hold) company CoreWeave (CRWV) was initially a bitcoin mining company. However, amid the FTX collapse and a brutal bear, the company was forced to pivot and focus on AI data centers in 2019. Whether the pivot was due to luck or foresight, it came at the right time, allowing CoreWeave to be a first mover in the red-hot AI infrastructure space.
CoreWeave differentiates itself from legacy, general cloud providers like“Google Cloud” and Amazon (AMZN) “Web Services” because it provides a specialized AI-native cloud infrastructure instead of general-purpose architectures. Additionally, CoreWeave’s high-performance computing (HPC) solutions are streamlined specifically to work well with NVIDIA’s (NVDA) industry-leading graphics processing units (GPUs) used to train AI models. Additionally, as the AI revolution shifts from chatbots to physical and agentic AI, the demand for low-latency specialized compute will scale in a hockey-stick-like fashion.
AI Compute Demand is Insatiable
The latest guidance from leading big tech companies suggests that 2026 will see a staggering $750 billion in AI CAPEX spend. Meanwhile, AI CAPEX spending is expected to soar to over at least $1 trillion by 2027.
Image Source: Apollo
CoreWeave provides the AI infrastructure layer for some of the fastest-growing and well-funded AI companies, including OpenAI and Anthropic. CRWV has grown revenues at a staggering triple-digit pace for 5 consecutive quarters. Meanwhile, Zacks Consensus Estimates suggest that the triple-digit revenue will continue through this year.
Image Source: Zacks Investment Research
CoreWeave Funding Will Finance Expansion
CoreWeave is on track to double its active capacity to over 1.7 gigawatts (GW) by the end of 2026. Key, multi-billion-dollar partnerships with companies like OpenAI ensure that demand will remain strong for the foreseeable future (CRWV has a $67 billion backlog). Meanwhile, a recent $6 billion investment from Jane Street and a $1 billion debt financing raise ensure that CRWV will be able to meet the insatiable demand.
Image Source: Zacks Investment Research
CRWV Quarterly Bull Flag Ahead of Earnings
CoreWeave will report Q1 EPS on Thursday, May 7th. The earnings report may act as a catalyst for the stock, especially since it is forming a picture-perfect quarterly bull flag pattern.
Image Source: TradingView
Bottom Line
As we look toward CoreWeave’s Q1 earnings report this Thursday, May 7th, the company finds itself at the epicenter of a historic capital cycle. While the "cat-and-mouse" game for LLM supremacy continues between Alphabet and Microsoft, the underlying demand for specialized, low-latency compute remains insatiable. With a "picture-perfect" bull flag pattern on the charts and fresh multi-billion-dollar commitments from the likes of Meta, CoreWeave is proving that in a digital gold rush, the most consistent gains often belong to those who own the infrastructure.
Zacks' Research Chief Names "Stock Most Likely to Double"
Our team of experts has just released the 5 stocks with the greatest probability of gaining +100% or more in the coming months. Of those 5, Director of Research Sheraz Mian highlights the one stock set to climb highest.
This top pick is a little-known satellite-based communications firm. Space is projected to become a trillion dollar industry, and this company's customer base is growing fast. Analysts have forecasted a major revenue breakout in 2025. Of course, all our elite picks aren't winners but this one could far surpass earlier Zacks' Stocks Set to Double like Hims & Hers Health, which shot up +209%.
Free: See Our Top Stock And 4 Runners UpAmazon.com, Inc. (AMZN) : Free Stock Analysis Report
Microsoft Corporation (MSFT) : Free Stock Analysis Report
NVIDIA Corporation (NVDA) : Free Stock Analysis Report
Alphabet Inc. (GOOGL) : Free Stock Analysis Report
CoreWeave Inc. (CRWV) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
