Nebius Sees Robust AI Cloud Growth: Will the Momentum Continue?

Nebius Group N.V. NBIS, an artificial intelligence (AI) cloud infrastructure provider, is capitalizing on the surge in global demand for AI computing power. The Amsterdam-based company has reported robust growth in its AI-focused cloud services, fueled by rising adoption across industries and increasing reliance on high-performance infrastructure to train and deploy advanced AI models.

So far in 2025, demand for AI infrastructure has surged, driven by the rapid adoption of generative AI, machine learning and high-performance computing applications. AI cloud infrastructure revenues grew more than nine times year over year in the second quarter of 2025, driven by demand for copper GPUs and near-peak GPU utilization.

NBIS’ revenues soared 625% year over year to $105.1 million in the second quarter. The increase in sales was primarily driven by strong performance in the company’s core business and excellent execution by the TripleTen team. Nebius’ core business is an AI cloud platform designed for intensive workloads, powered by in-house developed software and hardware with R&D hubs across Europe, North America and Israel.

Apart from this, the company has upgraded its cloud software to support growing capacity and large-scale clusters, expanded its customer base with major tech firms like Cloudflare, Prosus and Shopify, and maintained its lead as the go-to cloud provider for native AI startups. AI compute demand is growing fast, and the company is expanding capacity to drive growth in 2026 and beyond.

Nebius continues to see strong momentum in its business, with demand for AI compute remaining exceptionally high. The company updated its full-year outlook. It raised its guidance for annualized run rate (ARR) revenues from the previous range of $750 million to $1 billion to a new band of $900 million to $1.1 billion. For core business revenues, the company is maintaining its guidance of $400 million to $600 million.

Recently, Nebius signed a five-year, $17.4 billion AI infrastructure deal with Microsoft to supply dedicated GPU capacity from its new Vineland, NJ, data center, with rollout in 2025–2026. The contract could expand to $19.4 billion with added capacity. Nebius expects more such multi-faceted deals ahead, strengthening its position in the rapidly growing AI cloud market. These deals are expected to drive revenue growth.

However, stiff competition and broader macroeconomic uncertainties could pose challenges to NBIS’ growth trajectory. Nebius competes with technology giants like Microsoft Corporation MSFT and CoreWeave, Inc. CRWV.

Taking a Look at MSFT & CRWV’s AI Initiatives

Microsoft has made significant strides in advancing its AI capabilities. The company capitalizes on the momentum of AI business and Copilot adoption, alongside the acceleration of Azure cloud infrastructure expansion. In September, 2025, it and the U.S. General Services Administration launched the OneGov agreement, offering federal agencies up to 12 months of Microsoft 365 Copilot free, along with discounted Azure, Dynamics 365 and Sentinel services to drive AI adoption.

In August, 2025, Microsoft unveiled Dion, a model-optimization method improving scalability and efficiency for large-scale AI training, and commercialized its “Generative AI for Permitting” project to automate documents and speed clean-energy approvals. Also, Microsoft rolled out OpenAI’s GPT-5 across consumer, developer and enterprise products, including Microsoft 365 Copilot, GitHub Copilot, Visual Studio and Azure AI Foundry. MSFT also introduced its first proprietary AI models, MAI-Voice-1 and MAI-1-preview. These initiatives position Microsoft to deepen AI integration across its products, cloud services and enterprise solutions.

CoreWeave is an AI-focused company, and its cloud platform has been developed to scale, support and accelerate GenAI. In the second quarter, CoreWeave recorded a series of major achievements, securing high-profile customer wins across AI labs, hyperscalers and enterprises. This included a $4 billion expansion with OpenAI, adding to the previously announced $11.9 billion deal and onboarding a new hyperscaler customer that expanded within the quarter.

With more than 900 MW of active power targeted by year-end, CRWV is positioning itself as a top-tier provider capable of meeting the needs of large-scale AI training and inference workloads. Management has raised 2025 revenue guidance to $5.15–$5.35 billion from $4.9 billion to $5.1 billion projected earlier, citing accelerating demand and a robust pipeline.

NBIS Price Performance, Valuation and Estimates

Shares of Nebius have surged 358.3% in the past six months compared with the Internet – Software and Services industry’s growth of 37.3%.

In terms of price/book, NBIS’ shares are trading at 7.07X, higher than the Internet Software Services industry’s ratio of 4.48X.

The Zacks Consensus Estimate for NBIS’ earnings for 2025 has been unchanged over the past 30 days.

NBIS currently carries a Zacks Rank #3 (Hold).You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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