Forget Nebius Group Stock: This Quiet AI Leader Looks Like the Smarter Buy Today

Neocloud provider Nebius Group (NASDAQ: NBIS) has been one of the hottest stocks on the market in 2025, rising by an incredible 223% year to date. That terrific surge was a result of the rapidly growing demand for artificial intelligence (AI) data center infrastructure, which is outpacing supply by a large margin.

The good part is that shares of Nebius look to have more upside to offer in the coming year, according to Wall Street analysts. However, the stock has experienced a significant pullback in the past couple of months. Let's see why that has been the case.

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Concerns about debt-fueled AI infrastructure spending are weighing down Nebius stock

Nebius has shed about a third of its value since hitting a 52-week high on Oct. 10. That may seem surprising considering the incredible pace at which it's growing: In the first nine months of 2025, revenue shot up by 437% to $302 million. It also has a massive backlog that should allow it to sustain its momentum.

It is worth noting that Nebius has rented out all of its available data center capacity. It expects to increase its connected data center power capacity to a range of 800 megawatts (MW) to 1 gigawatt (GW) by the end of next year -- a significant jump from its current capacity of 220 MW.

This aggressive expansion plan should help Nebius convert a sizable chunk of its $20 billion-plus backlog into revenue next year and over the longer run. However, the stock may still be prone to significant volatility for a couple of reasons.

First, it's trading at an expensive premium of 64 times sales. For comparison, the tech-heavy Nasdaq Composite index's price-to-sales ratio is just 5.5. Of course, Nebius has a big enough backlog that it could eventually grow its top line by enough to justify its current share price, but to do that, it will need to secure the funding to bring more capacity online.

This brings us to the second reason why Nebius appears to be a risky investment at present. The company was sitting on $4.8 billion in cash at the end of the previous quarter, while its debt stood at $4.6 billion. To support its data center buildout plans, it's going to need considerably more money. Constructing a 1 GW data center costs an estimated $10 billion, plus another $20 billion to $30 billion for the chips to power it.

Nebius management says that it "will utilize at least three sources of financing: corporate debt, asset-backed financing, and equity" to meet its funding requirements for the next couple of years. As such, Nebius investors should expect to face share dilution. Meanwhile, the company will carry a higher debt load and take on the increased interest expenses that come with it.

These factors are likely to weigh on the stock price, especially considering that investors are already growing more concerned about the viability of debt-fueled AI infrastructure financing.

However, for investors looking to capitalize on the massive AI infrastructure investments that are still underway, there's a significantly cheaper and safer bet: Dell Technologies (NYSE: DELL).

Dell's server dominance could send the stock soaring in the long run

Dell gained renown for its personal computers, laptops, workstations, and peripherals. However, more recently, its server business has received a massive boost thanks to the adoption of AI. The company manufactures servers and storage solutions that are deployed in data centers by companies such as Nebius, along with networking infrastructure to help run AI workloads in the cloud.

More importantly, Dell is a meaningful player in the global server space, with a market share of just over 8%. Moreover, its share of the fast-growing AI server market is estimated at 20%, according to ABI Research. Second-place Hewlett Packard Enterprise's share is 15%.

That strong position in a high-growth business explains why Dell is anticipating that its AI server revenue will jump by 150% this year to $25 billion. And sales levels are likely to keep rising: Dell reported a record backlog of $18.4 billion as of Oct. 31, the end of its fiscal 2026 third quarter. Management pointed out on its earnings call last month that its potential AI server order pipeline for the next five months is "multiples of our backlog," suggesting that its revenue from this segment is poised to soar even higher.

Investors should note that according to Grand View Research, the AI server market could clock an annualized growth rate of 39% through 2030, generating $854 billion in revenue at the end of the forecast period. Dell's AI server business is growing at a much faster pace than that right now, which means that it's increasing its market share in the space. Assuming that Dell can corner a quarter of the AI server market by the end of the decade, its annual revenue from this segment could jump to more than $213 billion (based on the $854 billion market size estimate).

That would be nearly 9 times the revenue it is on track to generate from selling AI servers in its current fiscal year. Throw in additional catalysts that could boost the business, such as generative AI-capable personal computers, and it is easy to see why buying Dell while it is trading at just 0.8 times sales is a no-brainer investment. Of course, the company isn't growing as fast as Nebius is, but the combination of its leading position in the AI server market and the steady growth of its earnings and revenue makes it a safer bet for investors looking for a mix of growth and value.

Harsh Chauhan has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.