Is Nebius Group Poised to Outperform Traditional Cloud Giants in the AI Infrastructure Race?

The AI infrastructure arms race is heating up, and Nebius Group (NASDAQ: NBIS) has emerged as a formidable challenger to legacy cloud giants like Amazon Web Services (AWS) and Microsoft Azure. With its Q2 2025 earnings surge, aggressive expansion plans, and strategic differentiation, the question on investors' minds is whether Nebius can outperform these titans—and fellow neoclouds like CoreWeave (CRWV)—in the race to power the next AI revolution.

Q2 2025 Earnings: A Rocket Ship of Growth

Nebius's Q2 2025 results were nothing short of explosive. The company reported $105.1 million in revenue, a 625% year-on-year increase and 106% quarter-on-quarter surge. This growth far outpaces even the most optimistic projections for the AI infrastructure sector. More impressively, Nebius achieved positive Adjusted EBITDA in its core business ahead of schedule, a rare feat for a high-growth company.

The key drivers? A 625% YoY revenue jump was fueled by surging demand for AI compute, software, and services, as enterprises and startups alike scramble to build AI models. Nebius's vertically integrated platform—combining proprietary cloud software and in-house-designed hardware—has proven to be a winning formula. The company raised its annualized run-rate revenue (ARR) guidance to $900 million–$1.1 billion for 2025, up from earlier estimates.

Strategic Expansion: Powering the AI Future

Nebius is not just growing revenue—it's building the infrastructure to sustain it. The company is securing over 1 gigawatt (GW) of power by 2026, with 220 megawatts (MW) of connected power expected by year-end 2025. This includes new data centers in New Jersey (300 MW), Finland (tripled capacity), the UK (4,000 NVIDIA Blackwell Ultra GPUs), and Israel ($140 million national supercomputer).

The expansion is backed by $1.45 billion in cash reserves and strategic monetization of equity stakes in non-core businesses like ClickHouse and Toloka. Nebius is also leveraging renewable energy in Iceland and Finland, aligning with global sustainability trends while reducing costs.

Competitive Positioning: Against the Giants and Neoclouds

Nebius faces two types of competitors: legacy cloud providers (AWS, Microsoft) and neoclouds (CoreWeave).

1. Legacy Cloud Giants
2. AWS reported $30.9 billion in Q2 2025 revenue, with a 17% YoY growth and $10.2 billion in operating income. Microsoft's Intelligent Cloud segment hit $29.9 billion in revenue, up 26% YoY.

3. While AWS and Microsoft have massive scale and diversified workloads, they are general-purpose cloud providers. Nebius's AI-specific vertical integration (custom hardware + software) allows it to optimize for AI workloads like LLM training and inference, offering 71.4% gross margins in Q2 2025—far higher than AWS's typical 20–30% margins.

4. Neoclouds: CoreWeave's Challenge

5. CoreWeave (CRWV) is expanding rapidly, with $1.08 billion in Q2 2025 revenue (420% YoY growth) and a $9 billion acquisition of Core Scientific to boost power capacity. However, CoreWeave's $20–23 billion capex in 2025 and $260–300 million in quarterly interest expenses raise concerns about sustainability.
6. Nebius's $2 billion capex for 2025 is more disciplined, with $1.45 billion in cash and a 20% operating expense ratio (vs. CoreWeave's 100%+). Nebius is also securing power and GPUs at scale, while CoreWeave's debt-heavy model could strain its balance sheet.

Risks and Realities

Nebius's path to dominance is not without risks:
- Capital Intensity: The company's $2 billion capex and $216.3 million in operating expenses (206% of revenue) highlight its need for continuous funding.
- Competition: AWS and Microsoft are investing $124 billion and $120 billion annual run rates, respectively, and are integrating AI into their ecosystems.
- Supply Chain Constraints: GPU shortages and power availability could delay expansions.

However, Nebius's vertical integration, AI-specific focus, and strategic partnerships with NVIDIA (Blackwell and GB200 GPUs) give it a unique edge. Its ability to monetize AI workloads at $105.1 million in Q2—with gross margins improving from 46.65% to 71.4%—suggests a scalable model.

Investment Thesis: High Risk, High Reward

Nebius is a high-growth, high-risk bet for investors willing to ride the AI infrastructure wave. Its 625% YoY revenue growth, positive EBITDA, and aggressive expansion position it to capture a significant share of the $100 billion+ AI infrastructure market by 2027. However, the company must execute flawlessly on its capex plans and maintain its gross margin advantage.

For those seeking a long-term play on AI's infrastructure layer, Nebius offers a compelling case. But for risk-averse investors, the legacy cloud giants (AWS, Microsoft) remain safer bets, albeit with slower growth.

Conclusion

Nebius Group is not just keeping up with the AI infrastructure race—it's accelerating ahead of the pack. With its Q2 2025 earnings surge, strategic expansion, and differentiated AI platform, the company is well-positioned to outperform both legacy cloud providers and neoclouds like CoreWeave. However, success hinges on disciplined execution, sustainable cash flow, and the ability to scale without burning through capital.

For investors, the question isn't whether AI will reshape the world—it's whether Nebius can build the rails for that transformation. If the company continues on its current trajectory, the answer may soon be a resounding “yes.”