After 70% Rally, Is Nebius Stock Still The Top AI Cloud Pick?

Forbes

09-07-2025

CANADA - 2025/03/05: In this photo illustration, the Nebius logo is seen displayed on a smartphone ... More screen. (Photo Illustration by Thomas Fuller/SOPA Images/LightRocket via Getty Images)
The Europe-based cloud services provider Nebius (NASDAQ:NBIS) has seen its stock rise by 70% year-to-date, significantly outperforming the overall market. Unlike conventional hyperscalers like Amazon's AWS or Microsoft's Azure that provide a wide range of general-purpose cloud services, Nebius is part of a new category of "Neoclouds" that concentrate on high-performance infrastructure specifically for AI workloads. With the demand for generative AI remaining strong, Nebius is experiencing a surge in demand, reflected in a remarkable 385% year-over-year revenue increase in the first quarter of 2025. Despite the presence of other specialized companies in this arena, Nebius distinguishes itself for several reasons.
What Sets Nebius Apart
To begin with, the company maintains a close partnership with AI chip giant Nvidia (NASDAQ:NVDA), which produces the most powerful chips and effectively establishes industry benchmarks. Nvidia serves as both a key collaborator and investor, having participated in a $700 million funding round last year while holding over 1 million shares in the company. This relationship may provide Nebius with prioritized access to Nvidia's highly sought-after GPUs, such as the Blackwell super chips, when compared to other cloud service providers. This advantage can be significant in a GPU market where supply is constrained and demand greatly exceeds availability, especially for cutting-edge chips.
Another distinguishing factor for Nebius is its vertically integrated model. The company designs its own servers internally, circumventing OEMs and collaborating directly with manufacturers to reduce costs, enhance performance, and rapidly incorporate the latest GPUs. This level of control not only minimizes supply chain reliance but also accelerates deployment timelines. This capability is crucial for keeping pace with the fast-evolving AI development cycles. Additionally, it grants the company an advantage in terms of performance-per-watt compared to its competitors. Nebius also provides straightforward, transparent billing without any lock-in agreements, which appeals to smaller startups and AI-centric enterprises.
Buy Nebius Stock?
So, is Nebius stock worth purchasing at the current price of approximately $48 per share? The stock is trading at about 8.5 times the estimated FY'26 revenue. In comparison, larger competitor CoreWeave is trading at roughly 7 times FY'26 revenues. However, there are compelling reasons to favor Nebius over CoreWeave at this point in time. First, Nebius's growth prospects appear promising. The company aims for an annualized revenue run rate between $750 million and $1 billion by the end of 2025 and anticipates achieving adjusted EBITDA positivity this year. According to consensus estimates, Nebius's sales are expected to increase by 160% in the upcoming year, outpacing CoreWeave. (CoreWeave: Riding the AI Wave or Flying Too Close to the Sun?)
Additionally, Nebius's technological advantages, including its proprietary technology stack, could further differentiate it from competitors. By controlling both hardware and software, Nebius is able to optimize performance for specific AI workloads, providing a long-term competitive edge. Nebius also boasts a robust balance sheet, with nearly $2.5 billion in cash and no debt. This financial strength should enable Nebius to continue expanding its global presence with reduced financial risk. In contrast, CoreWeave carries over $8.5 billion in debt, which could lead to significant interest expenses and might affect profitability in the long run despite its rapid revenue growth.
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