Neocloud Infrastructure Race: Nebius and Iren Vie for AI Dominance

The rapid expansion of artificial intelligence is driving a surge in 'neocloud' providers—specialized data center operators that rent high-performance computing power to hyperscalers. Iren (IREN) and Nebius (NBIS) have emerged as frontrunners in this space, securing multi-billion dollar agreements to support the massive compute requirements of the AI era. Both firms operate on a similar business model, constructing massive data centers and leasing them to companies such as Microsoft and Meta Platforms. These partnerships provide the neoclouds with significant annual recurring revenue, though the valuation of these deals often hinges on the revenue generated per megawatt of power. Nebius has recently outperformed in dealmaking, securing two contracts with Meta Platforms totaling $27 billion over five years. This follows a $17.4 billion, five-year agreement with Microsoft for a 300-megawatt facility in New Jersey. In contrast, Iren signed a $9.7 billion, five-year deal with Microsoft for 200 megawatts of critical IT load. While Nebius currently commands higher rates per megawatt due to its integrated software stack, Iren possesses a larger growth runway. With a 4.5-gigawatt pipeline and the 1.4-gigawatt Sweetwater 1 project nearing completion, Iren is positioned to scale rapidly if it can secure new hyperscaler agreements. Investors are now focusing on Iren's upcoming fiscal 2026 Q3 results for signs of new contract wins to strengthen the bull thesis.