CoreWeave's stock falls as new Google cloud venture may signal more competition ahead

By Emily Bary

A joint venture between Google and Blackstone isn't 'immediately problematic' for CoreWeave, but rather a sign that the market could get more crowded, according to a Bernstein analyst

CoreWeave's stock dropped in Tuesday action.

A new joint venture between Google and Blackstone looks to be putting some pressure on neocloud stocks.

Google and Blackstone (BX) announced late Monday that they would team up to create a new cloud focused on tensor processing units, which are Google's custom chips. Blackstone plans to commit $5 billion at the outset to help bring 500 megawatts of cloud capacity online next year. Google, a unit of Alphabet (GOOG) (GOOGL), will supply the chips, software and various services.

The arrangement offers customers "more choice and flexibility in how they access cloud TPUs," according to a Google blog post. TPUs have become a powerful asset for Alphabet, and the company has teased that it plans to do more with its custom chips.

Shares of CoreWeave (CRWV) fell 3.8% on Tuesday, while competitor Nebius Group (NBIS) slipped 1%, with investors assessing the prospect of future threats to the business models of neoclouds, which rent out chip capacity.

Bernstein analyst Madison Rezaei noted that, at an anticipated 500 megawatts for 2027, "this announcement is small" relative to CoreWeave's expected scale for next year.

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In that sense, the deal "is not immediately problematic" for CoreWeave. However, it "represents the beginning of a more earnest hyperscale attack of the market," she added.

"An increase in competition will pressure [CoreWeave's] pricing and margins on new deals and make it more difficult for [CoreWeave] to transition towards a more enterprise-heavy base," Rezaei wrote.

In her view, when it comes to areas like cost of capital, long-term margin potential and power access, "a combined Blackstone + Google entity should win across all of those fronts." Rezaei has an underperform rating on CoreWeave's stock.

See also: How CoreWeave's 'situationship' with Big Tech could cause a stock drop

Representatives from CoreWeave and Nebius didn't immediately return a MarketWatch request for comment.

-Emily Bary

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05-19-26 1641ET