Up 70% This Year, Is Nebius Stock The Best Cloud Play For AI Age?

Europe-based cloud services player Nebius (NASDAQ:NBIS) stock has surged 70% year-to-date, considerably outperforming the broader market. Unlike traditional hyperscalers such as Amazon’s AWS or Microsoft’s Azure that offer a broad suite of general-purpose cloud services, Nebius belongs to a new class of “Neoclouds” that are focused on high-performance infrastructure for AI workloads. With demand for generative AI remaining robust, Nebius is seeing demand surge with revenue rising 385% year-over-year revenue growth in the first quarter of 2025. Although there are other specialized players in this space, Nebius stands out for a couple of reasons.

Image by kp yamu Jayanath from Pixabay

What Sets Nebius Apart

Firstly, the company has a close relationship with AI chip titan Nvidia (NASDAQ:NVDA), which makes the most capable chips while essentially setting the standards for the industry. Nvidia is both a key partner and investor, having taken part in a $700 million funding round last year and holding over 1 million shares in the company. This relationship could give Nebius preferred access to Nvidia’s much sought-after GPUs such as the Blackwell super chips compared to other cloud providers. This could prove to be a major advantage in a supply-constrained GPU market where demand far outpaces availability particularly for leading-edge chips.

Another factor that sets Nebius apart is its vertically integrated model. The company designs its own servers in-house, bypassing OEMs and working directly with manufacturers to cut costs, better optimize performance, and quickly integrate the latest GPUs. This level of control not only reduces supply chain dependencies, but also shortens deployment cycles. This is important for keeping up with fast-moving AI lifecycles. This also gives the company an edge in terms of performance-per-watt compared to other players. Nebius also offers simple, transparent billing without any lock-ins, making it appeal to smaller startups and AI-first businesses.

Buy Nebius Stock?

So is Nebius stock a buy at current levels of about $48 per share? The stock trades at about 8.5x estimated FY’26 revenue. This compares to larger rival CoreWeave which trades about 7x FY’26 revenues. However, there are some good reasons to pick Nebius over CoreWeave at this juncture. Firstly, Nebius’s growth outlook is strong. The company is targeting an annualized revenue run rate of $750 million to $1 billion by the end of 2025 and expects to turn adjusted EBITDA positive this year. Per consensus estimates, Nebius sales are projected to grow 160% next year, faster than  CoreWeave. (CoreWeave: Riding the AI Wave or Flying Too Close to the Sun?)

Moreover, Nebius technology advantages such as its proprietary technology stack could also help differentiate it versus rivals. By controlling both hardware and software, Nebius can fine-tune performance for specific AI workloads, giving it a long-term competitive edge. Nebius also has a strong balance sheet, including almost $2.5 billion in cash and zero debt. This should allow Nebius to continue building its global footprint with less financial risk. CoreWeave, on the other hand, carries over $8.5 billion in debt. This could result in considerable interest expenses and this could drag  down profitability in the longer run, despite its rapid revenue growth.

Learn more about Trefis RV strategy that has outperformed its all-cap stocks benchmark (combination of all 3, the S&P 500, S&P mid-cap, and Russell 2000), to produce strong returns for investors. Separately, if you want upside with a smoother ride than an individual stock like Nebius, consider the High Quality portfolio, which has outperformed the S&P, and clocked >91% returns since inception.

Invest with Trefis Market-Beating Portfolios
See all Trefis Price Estimates