Key Takeaways:
Cloud computing stocks surged Monday, with Nebius jumping more than 9% and CoreWeave rising over 7%, as investors piled into AI infrastructure plays amid a broad market rally fueled by the U.S.-Iran peace deal.
The rally swept across the sector. Oracle Corp., Hut 8 Corp., and IREN each gained more than 4%, while data center operators and cloud service providers tracked the broader tech advance. The Nasdaq Composite surged 3.1%, and the PHLX Semiconductor Index jumped more than 5% to a fresh record.
"The market is repricing cloud infrastructure names higher as the macro overhang from the Iran conflict lifts and AI CapEx commitments remain intact," said Rachel Kim, senior analyst at Edgen. "These companies are direct beneficiaries of the hyperscaler spending cycle that shows no signs of slowing."
The gains extended a monthslong run for cloud and data center stocks, which have benefited from surging demand for AI training and inference workloads. Enterprise customers are racing to secure compute capacity, with major cloud providers reporting record backlogs. Alphabet's Google Cloud, for instance, posted $20 billion in quarterly revenue last quarter, up 63% year over year, with management saying demand was outrunning supply.
The rally comes as hyperscalers — Microsoft, Amazon, Alphabet, and Meta — collectively plan to spend more than $300 billion on AI infrastructure this year, according to industry estimates. That spending flows directly to cloud service providers, data center operators, and chipmakers.
Nebius, the Amsterdam-based cloud platform that went public via a SPAC merger in 2024, has been among the biggest beneficiaries. The stock has more than tripled over the past 12 months as the company expanded its GPU-as-a-service offerings. CoreWeave, which specializes in cloud services for AI workloads, has similarly ridden the wave of enterprise demand for Nvidia H100 and B200 clusters.
Oracle's cloud business has also gained momentum, with the company reporting a 42% increase in cloud revenue in its most recent quarter. Hut 8 and IREN, both primarily known as Bitcoin miners, have pivoted into AI cloud services, repurposing their energy infrastructure and data center capacity for high-performance computing workloads.
The sector's valuation has become a point of debate. Cloud infrastructure stocks now trade at an average of 8 to 12 times forward sales, according to data compiled by Bloomberg, a premium to historical levels but supported by revenue growth rates that often exceed 50% annually. The risk, analysts caution, is that CapEx growth eventually outpaces revenue, compressing margins.
Still, Monday's rally suggests investors remain confident that AI-driven demand will sustain the cycle. With the Federal Reserve's two-day policy meeting beginning Tuesday and a rate decision due Wednesday, any shift in monetary policy could influence the cost of capital for these capital-intensive businesses. For now, the cloud computing trade is firing on all cylinders.
This article is for informational purposes only and does not constitute investment advice.
