Will NBIS' Tie-Up With NVDA Accelerate its AI Infrastructure Growth?
In a major stride toward AI dominance, Nebius Group N.V. NBIS deepens its partnership with NVIDIA NVDA, aiming to deliver next-generation AI infrastructure across global markets. NBIS reported 385% year-over-year revenue expansion in the first quarter, reflecting strong momentum and growing demand in its core AI infrastructure business. Its recurring revenue model is growing, with management targeting a $750 million–$1 billion run-rate by 2025. While adjusted EBITDA is likely to remain negative for the full year, Nebius expects it to become positive at 'some point in the second half of 2025.'
Robust growth momentum and rising demand for AI infrastructure support its lucrative investments. Per a report from Statista, the global AI market is projected to reach $1.01 trillion by 2031 at a CAGR of 26.6% from 2025-2031. This sharp increase creates a strong tailwind for companies like Nebius, which enables enterprise clients to leverage NVIDIA's Blackwell AI Factory platform.
The Blackwell platform is designed to enhance inference performance, enabling businesses to achieve swift and more accurate outcomes from AI models. By integrating this advanced infrastructure, NBIS is well-positioned to meet the growing enterprise demand for scalable, high-performance AI solutions. Recently, it announced the general availability of NVIDIA GB200 Grace Blackwell Superchip capacity for customers in Europe, marking significant progress in its aim to build a global, full-stack AI infrastructure. This highlights Nebius' commitment to driving AI innovation across Europe by incorporating NVIDIA's advanced computing into its AI Cloud platform.
NBIS has also expanded its global AI infrastructure with the deployment of NVIDIA Blackwell Ultra GPUs in the U.K. The initiative is likely to boost the U.K.'s digital infrastructure and support economic growth by giving businesses from startups to large enterprises access to cutting-edge AI compute. It will also benefit the U.K.'s academic and research sectors, as well as public services like the NHS.
Despite heavy investments and competitive pressures, Nebius is emerging as a strong contender in the AI infrastructure space. Also, for businesses scaling their AI efforts, the NBIS-NVDA collaboration has the potential to provide a strong competitive advantage.
Who's Competing With NBIS in the AI Space?
As NBIS ramps up its AI infrastructure capabilities, it faces stiff competition from tech heavyweights like Microsoft MSFT and other players such as CoreWeave, Inc. CRWV.
CoreWeave is an AI-focused hyperscaler company, and its cloud platform has been designed to scale, support and accelerate GenAI. It currently operates a data center network comprising 33 data centers across the United States and Europe, backed by 420 megawatts of active power. CRWV also collaborates with NVIDIA to implement the latter's GPU technologies at scale. CoreWeave was one of the first cloud providers to deliver NVIDIA H100, H200 and GH200 clusters into production for AI workloads. The company's cloud services are also optimized for NVIDIA GB200 NVL72 rack-scale systems.
Microsoft is a major player in AI infrastructure with its Azure platform, backed by a wide global data center network. With availability in more than 60 announced regions, Azure continues to strengthen its position in the cloud computing market. MSFT's multi-billion-dollar investment in OpenAI has significantly boosted its position in the AI space, whereas NBIS is still in the early phase of developing its network of strategic partners. The growing uptake of Azure OpenAI and Copilot in Microsoft 365, Dynamics 365 and Power Platform is encouraging. With Azure AI, it is creating a strong platform for the AI era, offering a wide range of models to suit different customer needs. It now has more than 60,000 Azure AI customers, and both customer numbers and average spending are rising.
NBIS Price Performance, Valuation and Estimates
Shares of Nebius have gained 74.4% year to date compared with the Internet–Software and Services growth of 23%.
From a valuation standpoint, NBIS trades at a forward price-to-sales of 11.19X, higher than the industry's 4.01.
The Zacks Consensus Estimate for NBIS' earnings for 2025 has been unchanged over the past 30 days.
NBIS currently carries a Zacks Rank #3 (Hold). You can see see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
Zacks Names #1 Semiconductor Stock
It's only 1/9,000th the size of NVIDIA which skyrocketed more than +800% since we recommended it. NVIDIA is still strong, but our new top chip stock has much more room to boom.
With strong earnings growth and an expanding customer base, it's positioned to feed the rampant demand for Artificial Intelligence, Machine Learning, and Internet of Things. Global semiconductor manufacturing is projected to explode from $452 billion in 2021 to $803 billion by 2028.
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