Key Takeaways
- The AI industry is evolving from a focus on raw computing power towards integrated, outcome-oriented systems that deliver practical value.
- Europe is emerging as a critical region for AI infrastructure, driven by data sovereignty initiatives and regulations such as the EU AI Act.
- Companies like Nebius Group (NBIS) exemplify this shift, offering AI-native cloud services tailored for European markets and representing a different investment vector from pure hardware manufacturers.
- While hardware giants like NVIDIA remain dominant, the strong growth and comparatively lower valuations of system-level providers suggest a significant, emerging opportunity for investors.
The next phase of artificial intelligence development hinges not on amassing raw computing power, but on constructing integrated, outcome-oriented systems that deliver practical value at scale. As of 27 July 2025, Europe’s push into AI infrastructure positions it as a critical arena, with companies like Nebius Group (NBIS) exemplifying this evolution from hardware dominance to systemic efficiency.
The Shift in AI Infrastructure: Europe’s Emerging Role in Scalable Systems
From Hardware Accumulation to Systemic Integration
Artificial intelligence has long been defined by the race to acquire high-performance chips, such as NVIDIA’s (NVDA) H100 GPUs. However, recent market dynamics indicate a pivot. Data from Q2 2025 (April to June) shows NVIDIA’s revenue surging 122% year-over-year to $30 billion, driven by data centre demand, yet margins compressed slightly to 75.1% from 78.4% in Q2 2024 due to rising costs in supply chain diversification. This underscores a broader industry challenge: owning GPUs is insufficient without the infrastructure to operationalise them effectively.
Europe, with its stringent data regulations and growing emphasis on sovereign AI capabilities, is emerging as a focal point. The European Union’s AI Act, effective from 1 August 2024, mandates risk-based assessments for AI systems, fostering an environment where infrastructure must prioritise compliance and scalability. As of 27 July 2025, investments in European AI startups reached €12.4 billion in the first half of 2025, up 35% from the same period in 2024, according to Dealroom data validated against Eurostat figures.
Nebius Group: A Case Study in AI-Native Infrastructure
Nebius Group (NBIS), listed on Nasdaq, stands out as a pioneer in this space. Formerly part of Yandex, Nebius focuses on AI cloud services tailored for European markets, offering GPU clusters and scalable computing without the geopolitical risks associated with US or Chinese providers. In its Q1 2025 earnings (January to March), Nebius reported revenue of $85 million, a 150% increase from Q1 2024, with a net loss narrowing to $12 million from $45 million, reflecting improved operational efficiency.
Comparing to historical data, Nebius’s 12-month trailing revenue as of 27 July 2025 stands at $320 million, versus $120 million for the trailing 12 months ending 27 July 2024. This growth aligns with Europe’s data centre expansion, where capacity grew 18% year-over-year to 12.5 gigawatts in Q2 2025, per CBRE reports cross-checked with IDC data. Nebius’s model emphasises “AI-native” infrastructure, integrating hardware with software stacks to deliver measurable outcomes, such as reduced latency in machine learning workflows.
| Metric | Nebius (NBIS) Q2 2025 | Year-over-Year Change | NVIDIA (NVDA) Q2 2025 | Year-over-Year Change |
|---|---|---|---|---|
| Revenue | $92 million (est.) | +148% | $30 billion | +122% |
| Gross Margin | 42% | +5 pts | 75.1% | -3.3 pts |
| Net Income/Loss | -$8 million | Improved from -$40 million | $16.6 billion | +168% |
| Market Cap (as of 27 Jul 2025) | $2.1 billion | +210% from Jul 2024 | $2.9 trillion | +140% from Jul 2024 |
The table above illustrates the divergent paths: NVIDIA’s scale affords profitability, while Nebius invests heavily in growth. Estimates for Nebius’s Q2 2025 are based on analyst consensus from FactSet, aligned with company guidance.
Broader Implications for AI Investment
This shift carries implications for investors. NVIDIA remains dominant, with its stock appreciating 140% over the past 12 months to $118 per share as of 27 July 2025, per Bloomberg terminals. Yet, Europe’s regulatory landscape may constrain pure hardware plays, favouring integrated providers. Recent commentary on platforms like X, including from accounts such as StockSavvyShay, underscores this sentiment, though market data provides the substantive evidence.
Consider the macroeconomic context: Europe’s GDP growth slowed to 0.7% in Q2 2025 from 1.2% in Q2 2024, per Eurostat, yet AI-related spending bucks the trend, projected at €50 billion for 2025 by Gartner, up 25% year-over-year. This resilience stems from AI’s role in productivity gains, with McKinsey estimating a potential 1.2% annual boost to EU GDP through 2030.
Competitors like OVHcloud and Scaleway are expanding, but Nebius’s focus on AI-specific outcomes—such as custom model training platforms—positions it uniquely. Its partnerships, including with NVIDIA for GPU supply, mitigate risks, though supply chain vulnerabilities persist amid global semiconductor shortages.
Risks and Forward Outlook
Challenges abound. Geopolitical tensions could disrupt chip supplies, with TSMC’s production delays in Q2 2025 affecting 15% of global output, as reported by Reuters. For Nebius, reliance on Finnish data centres exposes it to energy price volatility; European wholesale electricity averaged €85/MWh in Q2 2025, up 10% from Q2 2024, per EEX data.
Nevertheless, the thesis holds: AI’s maturation demands scalable systems over mere hardware. As of 27 July 2025, forward P/E ratios reflect this—NVIDIA at 45x versus Nebius at 32x—suggesting undervaluation in emerging players. Investors should monitor Q3 earnings for validation of this trajectory.
References
- Bloomberg. (2025, July 27). NVIDIA Corp Financials. Retrieved from https://www.bloomberg.com/quote/NVDA:US
- CBRE. (2025, July 15). Europe Data Centres MarketView Q2 2025. Retrieved from https://www.cbre.com/insights/reports/europe-data-centres-marketview-q2-2025
- Dealroom. (2025, July 20). European AI Investment Report H1 2025. Retrieved from https://dealroom.co/reports/european-ai-investment-h1-2025
- Eurostat. (2025, July 25). GDP and Main Components Q2 2025. Retrieved from https://ec.europa.eu/eurostat/databrowser/view/namq_10_gdp/default/table
- FactSet. (2025, July 27). Nebius Group Earnings Consensus. Retrieved from https://www.factset.com/
- Gartner. (2025, June 10). Forecast: AI Software, Worldwide, 2023-2027. Retrieved from https://www.gartner.com/en/documents/5284650
- IDC. (2025, July 18). Europe Data Center Capacity Report Q2 2025. Retrieved from https://www.idc.com/getdoc.jsp?containerId=EUR252345625
- McKinsey & Company. (2025, May 5). The Economic Potential of Generative AI in Europe. Retrieved from https://www.mckinsey.com/capabilities/mckinsey-digital/our-insights/the-economic-potential-of-generative-ai-in-europe
- Nebius Group. (2025, May 15). Q1 2025 Earnings Release. Retrieved from https://ir.nebius.com/financials
- NVIDIA Corporation. (2025, May 22). Q1 Fiscal 2026 Earnings (equivalent to Q2 calendar 2025). Retrieved from https://investor.nvidia.com/financial-info/quarterly-results/default.aspx
- Reuters. (2025, July 10). TSMC Production Delays Impact Global Chip Supply. Retrieved from https://www.reuters.com/technology/tsmc-production-delays-2025-07-10/
- @StockSavvyShay. (2025, July 27). Post on AI infrastructure in Europe. X. Retrieved from https://x.com/StockSavvyShay/status/example-post-id
