Nebius Group: A Strategic Buy as AI Infrastructure Demand Surges

The AI infrastructure arms race is accelerating, and Nebius Group (NASDAQ: NBIS) has emerged as a standout contender. With a $17.4 billion multi-year partnership with Microsoft—one of the most significant contracts in the sector—Nebius is not just capitalizing on the AI boom but redefining the valuation benchmarks for AI cloud providers. This deal, which could expand to $19.4 billion depending on performance, has already sent Nebius’s stock surging over 40% post-announcement, signaling investor confidence in its strategic positioning [1].

The Microsoft Partnership: A Game Changer

Nebius’s agreement with Microsoft is more than a revenue boost; it’s a structural transformation. The deal secures dedicated AI infrastructure capacity from Nebius’s new data center in Vineland, New Jersey, a critical asset in a market where physical infrastructure is becoming as valuable as software innovation. Analysts project this partnership could add $3.5–$3.9 billion in annual revenue, tripling Nebius’s 2026 forecasts [2]. By aligning with Microsoft, Nebius gains access to one of the most demanding and scalable AI clients in the world, ensuring long-term revenue visibility and operational resilience.

In contrast, CoreWeave (NASDAQ: CRWV), another AI infrastructure player, lacks such a high-profile anchor client. While CoreWeave reported $1.2 billion in Q2 2025 revenue (a 207% year-over-year increase), its financials reveal a net loss of $291 million, driven by $2.9 billion in capital expenditures for expansion [3]. CoreWeave’s reliance on GPU rentals and its lack of a dedicated hyperscaler partnership expose it to margin pressures and competitive risks that Nebius’s Microsoft deal mitigates.

Valuation Metrics: Justifying the Premium

Nebius’s price-to-sales (P/S) ratio of 66 appears exorbitant at first glance, but context is key. The company’s 322% year-over-year revenue growth and $1.68 billion in cash reserves justify the premium, especially when compared to CoreWeave’s P/S ratio of 12.4 [4]. While CoreWeave’s valuation appears cheaper, its 74.28% gross margin is offset by a 62% adjusted EBITDA margin but a 16% operating margin, reflecting operational inefficiencies [5]. Nebius, meanwhile, boasts a 53.67% gross margin and a 76.3% net profit margin in Q2 2025, demonstrating superior cost discipline [6].

The Microsoft deal further enhances Nebius’s valuation thesis. By monetizing its Vineland data center—a 220-megawatt facility expanding to 1 gigawatt by 2026—Nebius is transforming fixed costs into scalable revenue streams. CoreWeave, by contrast, remains dependent on volatile GPU rental markets and has yet to achieve profitability, with analysts projecting breakeven only by 2027 [7].

Strategic Resilience in a Competitive Landscape

Nebius’s balance sheet and strategic partnerships provide a moat against market volatility. The company reduced its net loss by 49% in 2025 through energy-saving solutions and optimized data center designs [8]. Its $1.68 billion cash position also allows for aggressive expansion without diluting shareholders—a stark contrast to CoreWeave’s debt-heavy capital structure.

Goldman Sachs and other analysts have reiterated “Buy” ratings for Nebius, citing its vertical product stack and cleaner balance sheet as advantages over peers [9]. CoreWeave’s technical expertise in GPU cloud platforms is undeniable, but its lack of a diversified revenue model and reliance on short-term contracts make it a riskier long-term bet.

Conclusion: A Compelling Case for Long-Term Value

Nebius Group’s $17.4 billion Microsoft deal is not just a transaction—it’s a strategic inflection point. By securing a long-term client with Microsoft’s scale, optimizing its data center infrastructure, and delivering exceptional profitability metrics, Nebius has positioned itself as a leader in the AI infrastructure race. While CoreWeave’s growth is impressive, its financial vulnerabilities and lack of strategic partnerships make it a less compelling investment in the long run. For investors seeking exposure to the AI boom, Nebius offers a rare combination of growth, resilience, and valuation discipline.

Source:
[1] Nebius: Microsoft Contract Resets Multiples (Rating ...], [https://seekingalpha.com/article/4820758-nebius-stock-microsoft-contract-resets-multiples-upgrade-strong-buy
[2] Nebius: Microsoft Buys In, Here's What Comes Next], [https://seekingalpha.com/article/4820760-nebius-stock-microsoft-buys-in-heres-what-comes-next
[3] Earnings call transcript: CoreWeave Q2 2025 reports ... [https://www.investing.com/news/transcripts/earnings-call-transcript-coreweave-q2-2025-reports-revenue-surge-stock-dips-93CH-4186916
[4] Nebius Group N.V. (NBIS) Valuation Measures & Financial [https://finance.yahoo.com/quote/NBIS/key-statistics/
[5] CoreWeave revenue, valuation & growth rate | Sacra [https://sacra.com/c/coreweave/
[6] Nebius Group Past Earnings Performance [https://simplywall.st/stocks/us/software/nasdaq-nbis/nebius-group/past
[7] CoreWeave, Inc. (CRWV) Q1 FY2025 earnings call transcript [https://finance.yahoo.com/quote/CRWV/earnings/CRWV-Q1-2025-earnings_call-345230.html/
[8] This Artificial Intelligence (AI) Stock Has Room to Run [https://www.fool.com/investing/2025/08/14/this-artificial-intelligence-ai-stock-has-room-to/
[9] Goldman Sachs reiterates Buy rating on Nebius Group [https://www.investing.com/news/analyst-ratings/goldman-sachs-reiterates-buy-rating-on-nebius-group-stock-after-microsoft-deal-93CH-4230811