We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Big tech hyperscalers are projected to spend ~$700 billion on AI infrastructure in 2026.
Specialized neocloud providers have distinct advantages over legacy cloud providers.
Nebius Group is the best-positioned neocloud.
The AI Buildout is Accelerating
The current artificial intelligence buildout is the largest industrial buildout since the railroad boom in the 1800s. America’s leading big tech companies are spending hundreds of billions of dollars to capture their piece of the fastest-growing industry since the internet in the late 1990s. In 2026, AI hyperscalers Microsoft ((MSFT - Free Report) ),Alphabet ((GOOGL - Free Report) ),Meta Platforms ((META - Free Report) ), Amazon ((AMZN - Free Report) ), and Oracle ((ORCL - Free Report) ) are expected to spend ~$700 billion on AI infrastructure CAPEX. By 2027, these hyperscalers are expected to spend a mind-boggling $729 billion in CAPEX. Much of that CAPEX spend is going to data centers, high-powered semiconductors, and energy.
What is a Neocloud?
Currently, much investor attention is focused on who will win the battle among frontier model labs like Anthropic and OpenAI. However, OpenAI and Anthropic have yet to IPO, and when they do, their valuations are likely to be sky-high. Nevertheless, instead of picking winners in the frontier space, investors can focus on the “picks and shovels” plays driving the AI boom.
Neoclouds are specialized cloud computing providers that rent the high-performance graphics processing units (GPUs) required to power artificial intelligence. These neoclouds differ from legacy cloud providers because they focus solely on delivering the compute needed for AI. Neoclouds have two major advantages over legacy cloud providers – they are less expensive than traditional cloud providers, and they require no hardware ownership (allowing tech firms to scale AI models without purchasing their own physical infrastructure).
Which Neocloud is the Best Investment?
Three of the main publicly traded neoclouds are Nebius Group ((NBIS - Free Report) ),IREN ((IREN - Free Report) ), and CoreWeave ((CRWV - Free Report) ). The three leading neocloud providers share several similarities. For instance, each has a multi-year partnership with leading semiconductor company NVIDIA ((NVDA - Free Report) ). Additionally, the three companies have landed multi-billion-dollar contracts in recent months. However, investors must understand the key differences. For example, stock performance varies widely. Over the past year, Nebius is up 109.70%, IREN is up 11.50%, and CoreWeave is down 38.90%.
Image Source: Zacks Investment Research
Why is Nebius Outperforming IREN & CoreWeave?
Although all the neoclouds are growing rapidly, Nebius is growing the fastest. Zacks Consensus Estimates suggest Nebius will grow revenue a blistering 530.09% in 2026 (vs. 151% for CRWV & 346% for IREN).
Image Source: Zacks Investment Research
Despite the lightning-fast top-line growth, the leading neoclouds are likely to remain unprofitable for the foreseeable future, as the costs for real estate, data centers, and cutting-edge GPUs are frontloaded. As a result, Nebius, CoreWeave, and IREN must rely heavily on debt financing.
Neoclouds: Pay Attention to Debt Interest
Not all neocloud debt is created equal. CoreWeave is currently paying 8.3% interest on its debt while Nebius pays 2.3% and IREN pays 1.7%. While IREN appears to have an advantage over Nebius on the surface, investors must exercise apply nuance. IREN’s debt is largely funded by converts, which created dilution. Conversely, Nebius has been able to receive a large portion of the capital needed upfront in its recent contract wins.
Image Source: Zacks Investment Research
Finally, with $8.04 billion in cash on hand, Nebius is better capitalized than IREN ($5.9B in cash) and CoreWeave ($5.52B in cash).
Image Source: Zacks Investment Research
Bottom Line
As the AI infrastructure buildout accelerates, investors are looking beyond frontier model labs. Neocloud providers offer compelling “picks and shovels” investments, but not all are created equal.
View the Zacks #1 Rank List
Image: Shutterstock
Neocloud Boom: Comparing Nebius, CoreWeave, & IREN
Key Takeaways
The AI Buildout is Accelerating
The current artificial intelligence buildout is the largest industrial buildout since the railroad boom in the 1800s. America’s leading big tech companies are spending hundreds of billions of dollars to capture their piece of the fastest-growing industry since the internet in the late 1990s. In 2026, AI hyperscalers Microsoft ((MSFT - Free Report) ), Alphabet ((GOOGL - Free Report) ), Meta Platforms ((META - Free Report) ), Amazon ((AMZN - Free Report) ), and Oracle ((ORCL - Free Report) ) are expected to spend ~$700 billion on AI infrastructure CAPEX. By 2027, these hyperscalers are expected to spend a mind-boggling $729 billion in CAPEX. Much of that CAPEX spend is going to data centers, high-powered semiconductors, and energy.
What is a Neocloud?
Currently, much investor attention is focused on who will win the battle among frontier model labs like Anthropic and OpenAI. However, OpenAI and Anthropic have yet to IPO, and when they do, their valuations are likely to be sky-high. Nevertheless, instead of picking winners in the frontier space, investors can focus on the “picks and shovels” plays driving the AI boom.
Neoclouds are specialized cloud computing providers that rent the high-performance graphics processing units (GPUs) required to power artificial intelligence. These neoclouds differ from legacy cloud providers because they focus solely on delivering the compute needed for AI. Neoclouds have two major advantages over legacy cloud providers – they are less expensive than traditional cloud providers, and they require no hardware ownership (allowing tech firms to scale AI models without purchasing their own physical infrastructure).
Which Neocloud is the Best Investment?
Three of the main publicly traded neoclouds are Nebius Group ((NBIS - Free Report) ), IREN ((IREN - Free Report) ), and CoreWeave ((CRWV - Free Report) ). The three leading neocloud providers share several similarities. For instance, each has a multi-year partnership with leading semiconductor company NVIDIA ((NVDA - Free Report) ). Additionally, the three companies have landed multi-billion-dollar contracts in recent months. However, investors must understand the key differences. For example, stock performance varies widely. Over the past year, Nebius is up 109.70%, IREN is up 11.50%, and CoreWeave is down 38.90%.
Image Source: Zacks Investment Research
Why is Nebius Outperforming IREN & CoreWeave?
Although all the neoclouds are growing rapidly, Nebius is growing the fastest. Zacks Consensus Estimates suggest Nebius will grow revenue a blistering 530.09% in 2026 (vs. 151% for CRWV & 346% for IREN).
Image Source: Zacks Investment Research
Despite the lightning-fast top-line growth, the leading neoclouds are likely to remain unprofitable for the foreseeable future, as the costs for real estate, data centers, and cutting-edge GPUs are frontloaded. As a result, Nebius, CoreWeave, and IREN must rely heavily on debt financing.
Neoclouds: Pay Attention to Debt Interest
Not all neocloud debt is created equal. CoreWeave is currently paying 8.3% interest on its debt while Nebius pays 2.3% and IREN pays 1.7%. While IREN appears to have an advantage over Nebius on the surface, investors must exercise apply nuance. IREN’s debt is largely funded by converts, which created dilution. Conversely, Nebius has been able to receive a large portion of the capital needed upfront in its recent contract wins.
Image Source: Zacks Investment Research
Finally, with $8.04 billion in cash on hand, Nebius is better capitalized than IREN ($5.9B in cash) and CoreWeave ($5.52B in cash).
Image Source: Zacks Investment Research
Bottom Line
As the AI infrastructure buildout accelerates, investors are looking beyond frontier model labs. Neocloud providers offer compelling “picks and shovels” investments, but not all are created equal.