Applied Digital and Nebius: Which AI Infrastructure Play Offers Better Growth Potential?

The AI Data Center Gold Rush Attracts Different Players

The AI boom has created massive demand for computing infrastructure, attracting diverse business models into the space. Applied Digital operates as a data center developer, building and leasing computing campuses to cloud and AI companies. Nebius, meanwhile, positions itself as a “full stack” AI infrastructure provider, bundling hardware, data centers, and managed software services into integrated solutions.

Both stocks have surged over 200% in the past year, reflecting investor enthusiasm for AI infrastructure plays. Yet their fundamentally different approaches—one focused on real estate and hosting, the other on comprehensive managed services—create distinct risk and reward profiles worth examining.

Applied Digital’s Strategic Pivot and Challenges

Applied Digital started by serving blockchain and Bitcoin mining operations but shifted toward mainstream cloud and AI markets in 2022. Its core model involves constructing data center campuses, installing power infrastructure, and leasing space to companies that deploy their own servers. This resembles traditional real estate development more than pure technology.

The company achieved a notable milestone by securing $16 billion in committed lease payments spanning 15 years, with the majority coming from CoreWeave, a rapidly expanding AI infrastructure services firm. This long-term revenue visibility provides stability, though it also locks the company into extended, potentially inflexible arrangements.

Complications emerged when Applied Digital launched Sai Computing in 2023—a cloud-based AI infrastructure subsidiary powered by Nvidia GPUs. While Sai grew quickly, it generated losses and created conflicts with existing data center customers like Amazon and Microsoft. This contradiction with the company’s original REIT-focused strategy prompted management to spin off Sai and merge it with EKSO Bionics to form ChronoScale, expected to conclude in the first half of 2025.

The spinoff will constrain near-term growth, but the core data center business remains solid. The company plans to double capacity at its Polaris Forge 1 campus over the coming years. By fiscal 2026, analysts project revenue will reach $297 million (a 38% increase), though the company will still report a $91 million net loss.

At an $8 billion enterprise value, Applied Digital trades at 27 times current sales—a premium valuation that assumes eventual profitability and strong long-term lease economics. The company has indicated future REIT aspirations but ongoing losses make this transition unlikely in the near term.

Nebius: Accelerating Growth From a Rebranded Foundation

Nebius emerged from a dramatic corporate transformation. Originally operating as Yandex, Russia’s dominant search engine and cloud services provider, international sanctions forced a 2022 pivot. The company relocated to the Netherlands, jettisoned Russian assets, and rebranded as Nebius, now purely focused on cloud-based AI infrastructure.

Unlike competitors that emphasize hardware-only offerings, Nebius integrates managed software services into customized solutions for data training, edtech, automation, and robotics applications. The company already boasts major contracts with tech leaders including Microsoft and Meta Platforms, signaling strong enterprise demand.

Revenue projections reveal the scale of expected growth. Monthly revenue annualized—which management expects to reach $7-9 billion by year-end 2025—points to potential $7.8 billion annual revenue by 2027. For 2026 alone, analysts anticipate 521% revenue growth to $3.45 billion, followed by another 125% surge to $7.8 billion in 2027.

Like Applied Digital, Nebius remains unprofitable during this build-out phase, yet the arithmetic is compelling. At a $24 billion enterprise value, the stock trades at just 7 times current sales—roughly one-quarter the multiple commanded by Applied Digital. Market concerns about future spending and persistent losses likely explain this valuation compression.

The Direct Comparison: Growth, Valuation, and Path to Profitability

The investment cases diverge sharply on three critical dimensions:

Growth momentum: Nebius projects 521% revenue growth in 2026 versus Applied Digital’s 38%. Even accounting for different base sizes, the growth differential is staggering.

Valuation efficiency: Nebius trades at 7x sales while Applied Digital commands 27x. Relative to growth rates, Nebius offers substantially better value.

Business clarity: Applied Digital must navigate the ChronoScale spinoff, campus expansion, and cost management simultaneously. Nebius has a more straightforward path—expand data centers, deliver managed services, achieve scale-driven profitability.

Market Positioning and Competitive Advantages

Applied Digital benefits from long-term lease visibility and strategic partnerships with CoreWeave, reducing revenue uncertainty. However, its REIT transformation remains years away, and the spinoff introduces execution risk.

Nebius leverages its Yandex heritage in cloud infrastructure while serving a broader market than pure compute providers. The “full stack” positioning differentiates it from competitors focused solely on GPU capacity. Early wins with Microsoft and Meta suggest enterprise acceptance of this integrated model.

The Investment Takeaway

For growth-focused investors in AI infrastructure, Nebius presents a more compelling opportunity than Applied Digital at current valuations. The combination of dramatically faster projected revenue growth, more attractive stock valuation, and a streamlined business strategy provides better risk-adjusted upside. Applied Digital remains viable for those comfortable with real estate dynamics and longer-term REIT optionality, but near-term execution challenges and premium valuation require justification.

Both companies will benefit as AI adoption accelerates, but Nebius’s clearer growth trajectory and cheaper valuation multiple make it the more attractive choice for new investors at this stage.