Nebius: A High-Conviction Play on AI Infrastructure Amid Microsoft Deal and Nvidia Backing

The AI infrastructure race is heating up, and Nebius Group (NBIS) has emerged as a compelling contender. With a $19.4 billion contract from Microsoft, strategic equity backing from NVIDIA, and a lean, cash-funded growth model, Nebius is positioning itself at the forefront of the AI cloud computing revolution. This analysis examines how Nebius’s unique combination of financial discipline, technological agility, and global expansion plans could outpace rivals like CoreWeave (CRWV) in the long term.

Microsoft’s $19.4 Billion Bet: A Strategic Inflection Point

Nebius’s landmark deal with Microsoft, announced in late 2024, represents a seismic shift in its trajectory. The contract, which includes $17.4 billion in guaranteed payments through 2031 with potential for an additional $2 billion, covers GPU capacity over a five-year term. Deployments are set to begin in 2025 at Microsoft’s Vineland, New Jersey data center, with the first phase expected to leverage NVIDIA’s Blackwell GPU architecture [1]. This partnership not only validates Nebius’s infrastructure capabilities but also secures a steady revenue stream during a critical scaling phase.

The strategic implications are profound. By aligning with Microsoft, Nebius gains access to one of the most advanced cloud ecosystems in the world, while Microsoft benefits from Nebius’s expertise in deploying high-performance AI hardware. This symbiosis mirrors the broader trend of tech giants outsourcing AI infrastructure to specialized providers, a market projected to grow at a 26.6% CAGR through 2031 [1].

NVIDIA’s Stake: More Than Just a Supplier

NVIDIA’s involvement with Nebius goes far beyond supplying GPUs. In December 2024, NVIDIA led a $700 million private placement equity round, acquiring 33,333,334 Class A shares at $21.00 per share, giving it a significant equity stake in the company [2]. This investment is part of NVIDIA’s broader strategy to dominate the AI infrastructure stack. By embedding its Blackwell GPUs into Nebius’s cloud platform, NVIDIA ensures its technology remains at the cutting edge of enterprise AI adoption.

The collaboration also includes joint development of cloud-based AI services. Nebius is the first provider in Europe to offer NVIDIA’s Blackwell architecture, enabling clients to access 14,000 GPUs via cloud partners without building their own data centers [3]. This model accelerates NVIDIA’s reach into AI labs and tech companies, while Nebius gains a recurring revenue stream from GPU-as-a-service contracts. Analysts note that this partnership could drive Nebius’s annual recurring revenue to $750 million–$1 billion by 2025 [1].

CoreWeave vs. Nebius: A Tale of Two Strategies

While CoreWeave (CRWV) dominates the U.S. market with a $68 billion market cap and a $25.9 billion contracted backlog, its debt-driven model raises red flags. CoreWeave’s $9 billion acquisition of Core Scientific provided 1.3 gigawatts of power infrastructure but also saddled the company with $25 billion in debt and interest expenses of $264 million in Q1 2025 [4]. In contrast, Nebius’s $13 billion valuation is supported by a $1.45 billion cash balance and only $188 million in debt, offering greater financial flexibility [2].

CoreWeave’s reliance on a few large clients—77% of its 2024 revenue came from its top two customers—also exposes it to demand volatility. Nebius, meanwhile, is diversifying its client base with a focus on developer tools and MLOps platforms, which improve gross margins and reduce customer concentration [3]. While CoreWeave trades at a 15.76X price-to-book ratio, Nebius’s 4.4X valuation reflects a more conservative approach, aligning with its Buy consensus rating versus CoreWeave’s Hold [4].

Global Expansion and AI Tailwinds

Nebius’s international expansion plans further differentiate it. The company is deploying NVIDIA Blackwell Ultra GPUs in the U.K. and launching its first U.S. GPU cluster in Kansas City, Missouri, with a roadmap to build over 1 gigawatt of power capacity by 2026 [1]. This global footprint taps into the $1.01 trillion AI market by 2031, with the U.S. data center processor segment alone growing at 25.46% CAGR [2].

Government support for AI infrastructure, particularly in the U.S. and Europe, adds another tailwind. Nebius’s focus on energy-efficient Blackwell GPUs aligns with regulatory trends favoring sustainable data centers, while its integrated software tools cater to enterprise demand for full-stack solutions [3].

Risks and Rewards

Nebius’s aggressive capex and international expansion carry execution risks, particularly in securing power and land in new markets. However, its cash-first model and ability to monetize non-core equity stakes reduce dilution risks for shareholders [2]. CoreWeave’s debt-heavy approach, by contrast, leaves it vulnerable to interest rate hikes and client churn.

For investors, the key question is whether Nebius can scale its infrastructure as quickly as CoreWeave while maintaining financial discipline. Given its strategic partnerships, lean balance sheet, and alignment with NVIDIA’s AI roadmap, the case for Nebius as a high-conviction play is compelling.

Conclusion

Nebius is capitalizing on the perfect storm of AI demand, NVIDIA’s technological leadership, and Microsoft’s cloud ecosystem. While CoreWeave’s scale and backlog offer near-term visibility, Nebius’s agility, financial prudence, and global expansion plans position it to capture a larger share of the AI infrastructure boom. As the market grows at a blistering pace, investors with a long-term horizon may find Nebius’s combination of strategic partnerships and disciplined execution hard to ignore.

Source:
[1] Daniel Romero (@HyperTechInvest) / X, [https://x.com/hypertechinvest]
[2] Nebius announces oversubscribed strategic equity financing of USD 700 million to accelerate roll-out of full-stack AI infrastructure [https://nebius.com/newsroom/nebius-announces-oversubscribed-strategic-equity-financing-of-usd-700-million-to-accelerate-roll-out-of-full-stack-ai-infrastructure]
[3] NVIDIA's AI Strategy: Analysis of Expanding Dominance in ... [https://www.klover.ai/nvidia-ai-strategy-analysis-expanding-dominance-in-ai-beyond-silicon/]
[4] CRWV vs. NBIS: Which AI Infrastructure Stock is the Smarter [https://finance.yahoo.com/news/crwv-vs-nbis-ai-infrastructure-144600198.html]