The AI revolution is creating a new investment battleground, not in flashy apps or models, but in the infrastructure that powers them. Compute capacity, GPU clusters and hyperscale cloud platforms have become the real engines of AI growth. In this fast-shifting landscape, two companies are drawing investor attention for very different reasons: Nebius Group N.V. NBIS, a high-velocity pure play building AI-first infrastructure from the ground up, and Alphabet Inc. GOOGL, a global tech giant leveraging its scale and proprietary chips to dominate the next wave of cloud AI.
According to an IDC report, spending on AI infrastructure is expected to top $758 billion by 2029. This uptrend in spending benefits both Google and Nebius, but not equally. They differ sharply in scale and growth trajectory. So, for investors looking to make a smart move in the AI infrastructure space, which stock truly stands out?
Let’s analyze their fundamentals, growth opportunities, market challenges and valuation to assess which one presents a stronger investment opportunity.
Nebius is operating in a supply-constrained AI-infrastructure market where demand for GPU capacity far exceeds available power and data-center readiness. Nebius is rapidly expanding its infrastructure to meet surging demand, targeting 2.5 gigawatts of contracted power by 2026, up from 1 gigawatt projected earlier, with 800 megawatts to 1 gigawatt of fully connected capacity expected by the end of next year. On the last earnings call, the company stated that it secured two major hyperscale contracts: a $3 billion, five-year deal with Meta and a $17.4–$19.4 billion agreement with Microsoft.
Also, the company is enhancing its enterprise offerings through the launch of its Aether 3.0 cloud platform and Nebius Token Factory, an inference solution for running open-source models at scale. In 2026, Nebius plans to continue expanding its existing data centers in the U.K., Israel and New Jersey, while bringing new facilities in the United States and Europe online during the first half of the year. The company is also securing several new large sites, each capable of delivering hundreds of megawatts, with some scheduled to go live before the end of 2026. Nebius is targeting $7–$9 billion in ARR for 2026 and is firmly on track to deliver $900 million to $1.1 billion by year-end 2025.
However, NBIS is grappling with macroeconomic uncertainty, rising operating costs and heavy capital requirements. SG&A expenses surged 87% year over year in the third quarter of 2025, and the company raised its 2025 capex outlook from roughly $2 billion to about $5 billion. Such elevated spending poses a risk if revenue growth fails to keep pace, particularly as AI demand may fluctuate under competitive pricing pressure and shifting regulatory conditions.
Management has also pointed to structural challenges, including difficulty securing adequate power, persistent supply-chain constraints and physical limitations that slow data-center construction. Also, the company has tightened full-year revenue guidance to $500–$550 million, expecting results to land near the midpoint due to timing delays in bringing capacity online. While adjusted EBITDA is expected to turn slightly positive at the group level by year-end 2025, it will remain negative for the full year. Moreover, scaling aggressively (multiple data centers in various regions) involves execution risk.
Alphabet has repositioned itself as a top-tier AI-infrastructure provider by leaning heavily into custom hardware, cloud-scale data centers and enterprise cloud services. Alphabet has been growing rapidly in the booming cloud-computing market. In third-quarter 2025, Google Cloud revenues increased 33.5% year over year. Google’s growing investments in infrastructure, security, data management, analytics and AI are positive.
Its strategic partnerships and acquisitions, and growing number of data centers, are helping Google to expand its cloud footprint worldwide. Alphabet is benefiting from its partnership with NVIDIA in cloud. Google Cloud was the first cloud provider to offer NVIDIA’s B200 and GB200 Blackwell GPUs and will be offering its next-generation Vera Rubin GPUs. Introduction of 2.5 flash, Imagen 3 and Veo 2 are noteworthy developments.
A deepening focus on Generative AI technology is a major positive for Alphabet. The company is cashing in on the increasing demand for Large Language Models with its most powerful AI model called Gemini. GOOGL is leveraging AI to boost search dominance with the launch of Gemini 2.5. Search revenues are driven by improving engagement with features like AI Overview. Circle to Search is driving additional Search and is gaining popularity among younger users.
Alphabet’s initiatives to deploy AI and infuse AI in Search are driving segment growth. GOOGL’s initiatives, like Mobile Friendly algorithm change, product listings, flight search, Google Now and the AI infusion, are expected to help drive Alphabet’s advertising revenues.
However, heavy capex spend could strain margins if AI returns do not materialize. For 2025, Alphabet now expects to spend capital expenditures between $91 billion and $93 billion, up from the previous estimate of $85 billion. The company expects capital expenditure to increase significantly in 2026. Moreover, stiff competition from Azure and AWS is concerning.
NBIS shares have plunged 24.3%, while GOOGL stock has soared 16.6% over the past month.
Zacks Investment Research
Image Source: Zacks Investment Research
Valuation-wise, Alphabet seems undervalued while Nebius seems overvalued, as suggested by the Value Score of B and the Value Score of F, respectively.
Zacks Investment Research
Image Source: Zacks Investment Research
In terms of Price/Sales, NBIS shares are trading at 65.15, lower than GOOGL’s 10.13.
Analysts have significantly revised their earnings estimates downward for NBIS’ bottom line for the current year.
Zacks Investment Research
Image Source: Zacks Investment Research
For GOOGL, there is a significant upward revision.
Zacks Investment Research
Image Source: Zacks Investment Research
NBIS carries a Zacks Rank #4 (Sell) at present, while GOOGL has a Zacks Rank #3 (Hold). Consequently, in terms of Zacks Rank, GOOGL seems to be a better pick at the moment.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Alphabet Inc. (GOOGL) : Free Stock Analysis Report
Nebius Group N.V. (NBIS) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
