Nvidia (NVDA 0.86%) and Palantir Technologies (PLTR 0.11%) have been two stocks investors could count on for outsized gains over the past few years -- and that continues as they both head for increases of more than 30% and about 130%, respectively, this year. This is thanks to the companies' strengths in the artificial intelligence (AI) market.
Nvidia designs the world's most sought-after AI chip, one that fuels the most essential AI tasks. And Palantir helps customers immediately apply AI to their operations and generate game-changing results. These companies already are benefiting from AI, and so are their customers.
In spite of these successes, Nvidia and Palantir haven't been scoring the biggest gains among AI players in recent months. In fact, one stock in particular has left these two market giants in the dust when it comes to stock performance. Let's meet the AI stock that's crushing Nvidia and Palantir in 2025.
A new AI player
I might surprise you when I say this player, in its current form, didn't even exist about a year and a half ago. It formed when Russian tech company Yandex sold off its Russian businesses last summer and reorganized under a new name with a headquarters in Amsterdam. I'm talking about Nebius Group (NBIS -7.80%), a stock that's jumped more than 300% this year.
Nebius soared into the spotlight, offering something in high demand right now -- and likely this demand will continue in the years to come. The company provides neocloud services, meaning it offers compute for AI workloads as well as a selection of managed services for customers.
This is extremely practical, as it means customers don't have to buy their own high-powered graphics processing units (GPUs) and instead can go to Nebius to rent access to these chips. And it also saves customers time, as they don't have to wait to ramp up a facility, but instead can take advantage of infrastructure that already exists.
Competing with cloud giants
Of course, Nebius competes with cloud giants such as Alphabet's Google Cloud and Microsoft Azure -- customers can run AI workloads through those services too. But major cloud service providers offer a wide range of services beyond AI, while Nebius has focused on specifically serving the AI customer. This specialization could help it fine-tune its offering to the needs of customers and stand out. On top of this, demand for AI capacity is so strong that there is room for the major cloud providers and up-and-coming neocloud players like Nebius all to generate growth.
And speaking of growth, this is what has wowed investors and led to the stock's fantastic performance. In the most recent quarter, Nebius reported a revenue increase of more than 600% -- this shows gains in momentum from the first quarter, when the company's revenue advanced 385%. And with quarterly revenue today at just over $100 million, there's plenty of room for growth in the quarters to come as more and more AI customers seek compute.
Should you buy this soaring stock?
So, should you buy the stock even after this year's tremendous gain so far? Though Nebius has what it takes to keep climbing, operating in the newish field of neocloud and without a long track record of revenue and profit, it does carry some risk.
If you're a cautious investor, you may feel more comfortable betting on one of the well-established cloud providers -- like Alphabet -- that's grown earnings over time. Or, for a bet sharply focused on AI, you might choose to buy shares of Nvidia, as the company's growth story clearly isn't over.
But if you're an aggressive investor eager to bet on the next phase of AI growth -- as AI customers rush to grab compute for training, inferencing, and more -- it's a great idea to add a few shares of Nebius to your portfolio. This company that's crushing AI leaders Nvidia and Palantir could continue to soar in the quarters to come.
