NBIS vs. AMZN: Which AI-Infra Stock Seems a Better Pick at the Moment?

The article compares Nebius Group N.V. (NBIS), a rapidly growing AI infrastructure pure-play, with Amazon (AMZN) and its dominant AWS platform, in light of an IDC report projecting AI infrastructure spending to exceed $200 billion by 2028. NBIS is pursuing an aggressive $2 billion capex plan targeting $750M-$1B in ARR for 2025, while AWS reported 17% revenue growth and boasts a $189 billion backlog; however, Amazon faces capacity constraints and competition from Microsoft and Google. Despite NBIS stock's recent outperformance (25.5% gain vs AMZN's 2.9%), analysts suggest Amazon is the better pick for long-term AI infrastructure growth potential.

Analysis

The AI infrastructure market is poised for significant expansion, with IDC projecting spending to exceed $200 billion by 2028, creating opportunities for both specialized and established players. Nebius Group N.V. (NBIS) is aggressively positioning itself as a pure-play AI infrastructure provider, evidenced by an increased $2 billion capital expenditure plan for 2025 and a target of $750 million to $1 billion in Annual Recurring Revenue (ARR) for the same year. NBIS is expanding its global capacity, including a new data center in Israel, and recently secured $1 billion in convertible notes to fund growth, alongside offering NVIDIA GB200 Superchip capacity. Despite a notable 25.5% stock price increase in the past month, NBIS faces challenges: analysts have revised earnings estimates downward, and the company anticipates negative adjusted EBITDA for the full year 2025, though expects a turn to positive in the second half. In contrast, Amazon's AWS remains a dominant force, reporting 17% year-over-year revenue growth in Q1 2025, an annualized revenue run rate of $117 billion, and a substantial $189 billion backlog. Amazon's AI business segment is experiencing triple-digit percentage growth, supported by investments in custom silicon like Trainium 2 and significant data center expansions, including up to $20 billion in Pennsylvania. However, Amazon contends with AI demand outstripping current capacity and intense competition from Microsoft Azure and Google Cloud, with heavy capex potentially pressuring margins. Valuation metrics indicate both companies are overvalued, with Zacks Value Scores of 'F' for NBIS (P/B 3.52X) and 'D' for AMZN (P/B 7.36X), though AMZN saw marginal upward earnings estimate revisions while NBIS saw significant downward revisions. The article concludes that Zacks views Amazon as a better pick for long-term AI infrastructure growth potential.

Key Decisions for Investors

• Investors should assess the distinct risk-reward profiles: NBIS offers a high-growth, specialized AI play contingent on executing its $2B capex plan and achieving its $750M-$1B 2025 ARR target, while Amazon provides more diversified exposure through its established AWS platform with a $117B annualized run rate.
• Monitor NBIS's path to profitability, particularly its ability to achieve positive adjusted EBITDA in the second half of 2025 as guided, and improvements in earnings estimates which have recently trended downwards.
• For Amazon, track AWS's sustained revenue growth, the monetization progress of its AI initiatives, and its ability to manage capacity constraints and competitive pressures from other hyperscalers, considering its significant ongoing capital expenditures.
• Given that both stocks are flagged as overvalued by Zacks Value Scores (NBIS 'F', AMZN 'D') and trade at high Price/Book ratios (NBIS 3.52X, AMZN 7.36X), carefully consider entry points and overall market sentiment towards growth technology stocks.