Comparing Nebius Group and Microsoft: A Look at AI Infrastructure

Nebius Group N.V. (NBIS) is emerging in the AI infrastructure market, while Microsoft Corporation (MSFT) stands as a tech giant. Microsoft’s Azure cloud platform is the second-largest cloud service, following Amazon Web Services (AWS). Its investment in OpenAI has solidified Azure’s status as the premier platform for AI applications.

The swift growth of AI is reshaping the technology landscape, and AI infrastructure is becoming a critical competitive arena among tech firms. According to a report by IDC, investment in AI infrastructure is projected to exceed $200 billion by 2028. While both Microsoft and Nebius will benefit from this upward trend, the gains may not be equal. Thus, investors seeking opportunities in AI infrastructure must consider which stock stands out.

Let’s analyze the strengths and weaknesses of both companies to determine the better investment.

The Case for Nebius

Located in Amsterdam, Nebius is establishing itself as a focused AI infrastructure company. Its main offering, Nebius, is an AI-powered cloud platform tailored for demanding AI and machine learning (ML) workloads, utilizing both owned and colocation data center assets. The firm employs NVIDIA’s (NVDA) Reference Architecture to construct its AI cloud services. Additionally, NBIS develops full-stack AI infrastructure, including large-scale graphics processing units (GPUs), cloud platforms, and developer tools. Noteworthy products also comprise Toloka, an AI development platform; TripleTen, an educational technology service; and Avride, an autonomous vehicle initiative.

Nebius aims to enhance its data center presence and GPU deployments by 2025. The company is aggressively expanding within the United States, having launched its inaugural NVIDIA GPU cluster in Kansas City (5 MW initial phase) in November 2024. This facility will host thousands of NVIDIA’s Hopper GPUs, with the next-generation Blackwell platform expected in 2025. This setup is expandable to 40 MW, reducing latency for U.S. clients and enhancing the advantages of its AI-native cloud service. The firm is keen on establishing additional GPU clusters throughout the U.S. to meet the growing demand for top-quality AI infrastructure.

In March 2025, Nebius announced plans for a new data center in New Jersey with a total capacity of 300 MW, anticipated to finish its first phase by summer 2025. Concurrently, it revealed additional capacity at its existing colocation facility in Kansas City, expected to be operational by the end of Q2 2025. As it expands its AI infrastructure in Europe, Nebius is also working on a new colocation site in Keflavik, Iceland.

Given these advancements, Nebius is targeting a revenue run rate between $750 million and $1 billion for 2025. The company also holds a solid financial position, raising $700 million in a private placement with investors, including NVIDIA, Accel, and Orbis, in December 2024. At the close of Q4 2024, Nebius reported $2.4 billion in cash.

However, near-term growth may remain subdued for Nebius, as a challenging global macroeconomic environment presents hurdles. Rising lead times due to more selective customer behavior are likely to hinder revenue growth. Consequently, significant investments in capacity expansion may pressure margins in the short term.

The Case for Microsoft

In contrast to startup Nebius, Microsoft is a leading player in AI infrastructure, thanks to its Azure platform, which offers expansive global data center coverage. Azure’s availability in over 60 regions worldwide bolsters Microsoft’s competitive position in cloud computing.

Microsoft is also heavily investing in AI, including the development of custom AI chips like Azure Maia and Azure Cobalt.

The company’s multi-billion-dollar investment in OpenAI has significantly impacted the market. Microsoft is the exclusive cloud provider for OpenAI, hosting all workloads on the Azure platform. This partnership grants Azure priority access to cutting-edge AI models like GPT-4 Turbo and DALL·E. Microsoft is integrating OpenAI models directly into its services, including Copilot, Azure, and Bing, creating opportunities for cross-selling and revenue growth.

The increasing adoption of Azure’s enterprise capabilities, combined with Copilot across Microsoft 365, Dynamics 365, and Power Platform, bodes well for future performance. With Azure AI, Microsoft is establishing itself as a crucial AP server for the AI movement, enabling access to various models tailored to customer needs. Currently, the company has over 60,000 Azure AI customers.

In its last reported quarter, Microsoft Cloud revenues reached $40.9 billion, reflecting a 21% growth rate. Azure and other cloud services saw a 31% revenue increase, including a remarkable 157% year-over-year growth in AI services, significantly exceeding expectations despite ongoing higher demand than available capacity. Microsoft forecasts Azure revenue growth between 31% and 32% in the fiscal third quarter. Additionally, Microsoft’s cash reserves of $71.55 billion are substantially larger than Nebius’s funds.

Comparing Stock Performance: MSFT vs. NBIS

Both MSFT and NBIS have faced stock declines amid recent tech sell-offs, which were spurred by escalating trade tensions. Nevertheless, MSFT has only decreased by 3.1%, while NBIS has seen a sharper drop of 17.9%.

Image Source: Zacks Investment Research

Stock Valuation of MSFT & NBIS

In terms of valuation, both companies appear overvalued, with Microsoft receiving a Value Score of D and Nebius a Value Score of F.

Regarding Price-to-Book ratios, NBIS shares are trading at 1.52X compared to MSFT’s 9.13X.

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