The differentiation of the computing power market: CoreWeave and Nebius sprint for short-term high margins, while AWS focuses on long-term contracts.

Last week, Nebius and CoreWeave both introduced a new business opportunity to investorsshort-term computing power contracts. These emerging cloud providers stated that with such contracts, they could capitalize on the soaring prices of AI computing power amid a GPU shortage. Market investors recognized this, leading to a significant rise in the stock prices of both companies. Just as these emerging cloud providers painted a promising picture for investors regarding the lucrative profit margins of short-term trading, cloud computing giant Amazon Web Services emphasized during its earnings call that the vast majority of its AI computing power is sold under long-term contracts of five years. Amazon CEO Andy Jassy noted that long-term contracts ensure AWS generates ample revenue to cover data center expansion costs. Investors also endorsed this logic, with Amazons stock price rising over 11% since the earnings call on July 30. Currently, both emerging cloud providers are only modestly increasing their short-term contract arrangements. CoreWeaves Chief Financial Officer Nitin Agarwal admitted to analysts that only a "very small portion" of their computing power is up for renewal, limiting their ability to seize high-price opportunities at present. According to insiders, CoreWeave defines contracts of less than three years as short-term contracts, encompassing hosted inference and other on-demand services. Sources indicate that short-term contracts currently account for only a small fraction of the company's total revenue, mainly because most computing power has been leased on a long-term basis, but the company expects this proportion to continue to rise in the future.