Why Nebius Group Is Capturing Smart Money Amid the AI Infrastructure Boom

The AI infrastructure race is accelerating, and Nebius Group (NASDAQ: NBIS) has emerged as a standout player. With institutional investors piling in and a landmark $17.4 billion contract with Microsoft, the company is positioning itself at the intersection of cloud computing and artificial intelligence. For investors seeking exposure to the next phase of tech-driven growth, Nebius offers a compelling case-backed by data, strategic partnerships, and a rapidly expanding market.

Institutional Inflows Signal Confidence

Nebius has attracted a wave of institutional capital in 2025, with inflows totaling $1.56 billion over the past 12 months, far outpacing outflows of $398.49 million, according to a Fool article. Axim Planning & Wealth, for instance, allocated $232,000 to acquire 4,190 shares of Nebius Group N.V. in Q2 2025, as reported in a MarketBeat alert. Meanwhile, Signaturefd LLC and Assetmark Inc. increased their stakes by 125% and 102%, respectively, reflecting a broader trend of institutional validation, according to the same MarketBeat alert. These moves are not isolated: institutional and hedge fund ownership now accounts for 21.90% of the company's stock, as noted in the MarketBeat alert. Such concentrated ownership underscores confidence in Nebius' ability to capitalize on the AI infrastructure boom.

A $17.4 Billion Bet on the Future

Nebius' partnership with Microsoft is the linchpin of its growth story. In September 2025, the company secured a five-year, $17.4 billion contract to supply GPU compute capacity for Azure, with potential expansion to $19.4 billion if additional capacity is added, according to a Fool article. This deal not only validates Nebius' technical capabilities but also provides a clear revenue runway. Microsoft's decision to partner with Nebius-rather than relying solely on its own Azure infrastructure-highlights the growing demand for specialized AI hardware and the limitations of traditional cloud providers in meeting this need, as noted in a Simply Wall St. analysis.

The timing is critical. Microsoft's expanded collaboration with OpenAI and its pursuit of neocloud providers like Iren (which recently inked a $9.7 billion deal) signal a sector-wide shift toward distributed AI infrastructure, according to a SSBCrack report. Nebius, with its high-performance GPU clusters and scalable architecture, is uniquely positioned to benefit from this trend.

Capacity Constraints and Explosive Demand

Nebius' AI cloud infrastructure is already operating at near-peak utilization, with demand outpacing supply in Q2 2025, according to a Fool article. This has led to a ninefold year-over-year revenue surge in the same quarter, driven by clients seeking access to its AI compute resources, according to a Yahoo Finance report. Analysts project that new capacity will sell out quickly, fueling a 392% year-over-year revenue jump to $578.16 million in fiscal 2025, as reported in a Fool article. Crucially, the Microsoft deal ensures that this capacity will be fully utilized, reducing the risk of underperformance.

The company's financials are also improving. While Nebius has historically operated at a loss, the rapid scaling of its AI business is expected to significantly narrow losses per share in 2025, according to a Fool article. This transition from growth at any cost to sustainable profitability is a key catalyst for long-term value creation.

A $2 Trillion Market, AI at Its Core

Nebius' ascent must be viewed within the context of a $2 trillion global cloud market, which Goldman Sachs predicts will reach this milestone by 2030, according to a Goldman Sachs insight. AI is a major driver of this growth, with generative AI alone projected to account for 10–15% of cloud spending-translating to $200 billion to $300 billion in annual revenue, according to the Goldman Sachs insight. The cloud AI market itself is expanding at a 39.7% CAGR, surging from $58.78 billion in 2025 to $647.60 billion by 2030, according to a Grand View Research report.

Nebius is not just a participant in this growth-it's a beneficiary of structural tailwinds. Its focus on AI-specific infrastructure aligns with the needs of enterprises and hyperscalers alike, who require specialized hardware to train large language models and run complex AI workloads. As Microsoft and other tech giants continue to outsource GPU capacity, Nebius' role as a neocloud provider becomes increasingly indispensable.

Conclusion: A High-Conviction Play

Nebius Group's combination of institutional backing, a landmark Microsoft deal, and a dominant position in the AI infrastructure market makes it a high-conviction investment. The company is not only riding the AI wave but actively shaping it. For investors willing to bet on the next phase of cloud computing, Nebius offers a rare mix of near-term revenue visibility and long-term growth potential.

As the $2 trillion cloud market continues to evolve, Nebius' ability to scale its AI infrastructure and maintain strong institutional support will be critical. But with smart money already moving in, the question is no longer if Nebius can succeed-it's how fast.