Leopold Aschenbrenner, a prominent German AI researcher and investor who previously worked at OpenAI, launched his Situational Awareness hedge fund in Sept. 2024. That AI-focused fund has delivered a return of more than 1,000% since its inception and now manages more than $20 billion in assets.
Aschenbrenner believes the ultimate bottleneck for the AI market's growth won't be algorithms, but rather the physical constraints of data centers, chips, and power grids. That's why his fund invests heavily in "neocloud" companies. Unlike "hyperscale" clouds like Amazon Web Services (AWS), which provide a broad range of general-purpose cloud services, neocloud companies only provide cloud infrastructure services for AI companies.
Image source: Getty Images.
By installing specialized hardware (like data center GPUs) across their streamlined architecture, neocloud companies can process AI tasks faster and more cheaply than hyperscalers. They can also offer more flexible contracts. According to Synergy Research Group, the neocloud market could grow at an explosive 58% CAGR from 2025 to 2031 as the AI market expands.
What are Aschenbrenner's three big neocloud stocks?
That's why Situational Awareness's investments in three neocloud companies -- Nebius (NBIS -1.01%), CoreWeave (CRWV +6.26%), and IREN (IREN +8.70%) -- are attracting so much attention. Nebius, which is based in the Netherlands, provides customized AI infrastructure services for the data training, edtech, and robotics markets. CoreWeave, based in the U.S., primarily helps companies run GPU-intensive tasks remotely. IREN, which is headquartered in Australia, is another vertically integrated AI cloud data center company which only uses renewable energy.
NASDAQ: NBIS
Key Data Points
Nvidia (NVDA +2.27%), the world's largest producer of data center GPUs, owns major stakes in Nebius and CoreWeave, and has the option to buy a major stake in IREN. Analysts expect all three companies to deliver explosive sales growth over the next few years.
|
Company |
2026 Revenue Growth |
2027 Revenue Growth |
2028 Revenue Growth |
|---|---|---|---|
|
Nebius |
550% |
225% |
90% |
|
CoreWeave |
147% |
97% |
60% |
|
IREN |
46% |
311% |
111% |
Data source: Marketscreener.
Nebius, CoreWeave, and IREN trade at six, three, and seven times next year's sales, respectively. Those price-to-sales ratios are surprisingly low, but that's probably because investors are concerned about the high costs of expanding their cloud infrastructure.
But over the long term, economies of scale could reduce their costs and stabilize profit growth. That's why it could be smart to invest in these neocloud companies, even as near-term concerns about their spending continue to compress their valuations. It's also a good idea to follow Aschenbrenner and Nvidia's lead and spread your bets across all three companies -- as well as other neocloud companies -- just in case one of them fizzles out.
