Key Takeaways
- Applied Digital (APLD) and Nebius (NBIS) are two distinct investment options in the rapidly growing artificial intelligence (AI) market.
- Applied Digital builds data center campuses for cloud, AI, and high-performance computing (HPC) companies, while Nebius provides cloud-based AI infrastructure services for a wide range of industries.
- Both stocks have more than tripled over the past 12 months, but Nebius is considered a better buy due to its stronger growth rates, lower valuation, and clearer plans for the future.
- Applied Digital’s spin-off of its cloud computing business, Sai Computing, will throttle its near-term growth, but its data center hosting business has already secured $16 billion in lease payments for the next 15 years.
- Nebius has secured big AI infrastructure contracts from tech giants like Microsoft and Meta Platforms, and expects its monthly revenue to reach $7 billion to $9 billion by the end of this year.
Introduction to Applied Digital and Nebius
Applied Digital (APLD) and Nebius (NBIS) are two companies that have gained significant attention in the rapidly growing artificial intelligence (AI) market. Applied Digital builds data center campuses for cloud, AI, and high-performance computing (HPC) companies, while Nebius provides cloud-based AI infrastructure services for a wide range of industries. As the article states, "Applied Digital’s business is still evolving" and it has "pivoted toward the cloud, AI, and HPC markets in 2022." On the other hand, Nebius has "rebooted" its business and is now "impressing the bulls" with its cloud-based AI infrastructure services.
Applied Digital’s Business Model and Growth
Applied Digital’s core business model involves building data centers, powering them up, and leasing that space to companies that install their own servers. This makes it more of a real estate company than a tech one. As the article notes, "Today’s Change (7.43%) $2.09 Current Price $30.20" and "Market Cap $7.9B." Applied Digital has also launched a new subsidiary, Sai Computing, to provide its own cloud-based AI infrastructure services powered by Nvidia’s high-end GPUs. However, this business will be spun off and merged with EKSO Bionics Holdings to create a new company called ChronoScale. This spin-off will throttle Applied Digital’s near-term growth, but its data center hosting business has already secured $16 billion in lease payments for the next 15 years.
Nebius’ Business Model and Growth
Nebius, on the other hand, was previously known as Yandex, which owned Russia’s leading search engine and a wide range of portals, mobile apps, and cloud-based services. However, due to sanctions against Russia, it suspended its shares in 2022, relocated its business to the Netherlands, spun off its Russian assets, and rebranded itself as Nebius. As the article states, "Nebius installs powerful AI servers in its own data centers and provides that computing power to companies that prefer not to install their own on-site servers." Nebius has already secured big AI infrastructure contracts from tech giants like Microsoft and Meta Platforms, and expects its monthly revenue to reach $7 billion to $9 billion by the end of this year.
Comparison and Valuation
Both Applied Digital and Nebius have more than tripled over the past 12 months, but their valuations and growth rates differ significantly. Applied Digital appears expensive at 27 times this year’s sales, while Nebius seems reasonably valued at seven times this year’s sales. As the article notes, "The near-term concerns about its spending and persistent losses might be compressing its valuations." However, Nebius’ stronger growth rates, lower valuation, and clearer plans for the future make it a better buy than Applied Digital right now.
Conclusion
In conclusion, Applied Digital and Nebius are two distinct investment options in the rapidly growing artificial intelligence (AI) market. While Applied Digital’s spin-off of its cloud computing business will throttle its near-term growth, its data center hosting business has already secured $16 billion in lease payments for the next 15 years. Nebius, on the other hand, has secured big AI infrastructure contracts from tech giants and expects its monthly revenue to reach $7 billion to $9 billion by the end of this year. As the article states, "The better buy: Nebius" due to its stronger growth rates, lower valuation, and clearer plans for the future.
https://www.fool.com/investing/2026/01/05/better-artificial-intelligence-stock-applied-digit/