Latest news with #NebiusGroup
Globe and Mail
a day ago
- Business
- Globe and Mail
Why Nebius Group Is One of the Top AI Stocks to Watch
Nebius Group (NASDAQ: NBIS) has had its share of hurdles and headwinds, but is now well-positioned to advance its stock price. The primary hurdle was the divestiture of its Russian operations, which closed last year. Now, the company is a leaner, nimbler, and more focused entity that is able to pursue its AI agenda. That is, building and operating an advanced network of HPC data centers for the AI industry. It is among the earliest adopters of NVIDIA's (NASDAQ: NVDA) full-stack approach to AI infrastructure and is a Reference Platform NVIDIA Cloud Partner. Reference Platform NCPs are a critical block in AI infrastructure. NVIDIA recognizes them as adhering to the highest standards for performance, security, and support. The designation alerts third-party AI operators to the fact that Nebius Group's AI-focused data centers are built on NVIDIA's architecture and optimized for AI workloads, LLMs, and generative AI. That's a competitive edge in a world where AI compute demand is expected to grow exponentially for years. Nebius Group's Solid Q1 and Guidance Affirm AI Demand Outlook Nebius had a strong quarter in FQ1 with revenue in its core operations surging by 385% year-over-year (YOY). The surge was driven by high-double to high-triple-digit increases in all segments, led by AI infrastructure. Critical details include improving operational quality despite continued losses. Losses are primarily due to R&D, investment, and non-cash share-based compensation and are expected to dwindle as the year progresses. The guidance is the driving force for this market, reaffirmed with full-year revenue in the range of $500 to $700 million. That is a forecast for significant sequential acceleration, which may be cautious due to the increasing demand for AI capacity. The balance sheet is in good condition, but there is some risk of dilution. The company's share count increased sequentially in Q1 and may continue to rise as the year progresses. Even so, the balance sheet highlights include ample cash, increasing equity, and ultra-low leverage, with total liabilities of less than 0.1x the equity. The analysts' response to the news was bullish, extending a trend that began the month prior. It includes increasing coverage, upgrades to Buy, and a rising price target that forecasts a 35% upside at the consensus. The revision trend is leading to the high range, which adds 30% to it, and institutional activity aligns with the bullishness. They own only 22% of the market in mid-June, but are buying on balance in 2025, and their activity spiked in Q2. The largest shareholders include Orbis Allan Gray, Slate Path Capital, and Citadel Advisors, which collectively own approximately 10%. Orbis Allan Gray is a South African-based firm utilizing a contrarian approach to long-term investing. Catalysts Ahead for Nebius Group Not only is Nebius Group on track to accelerate its hypergrowth in FQ1 2025, but it is also tracking toward profitability. The full-year guidance includes losses, but the shift to positive EBITDA is expected in the second half. The takeaway for investors is that profitability is at hand and is likely to improve in 2026, resulting in adjusted full-year profits. Consequently, both the 2025 and 2026 forecasts are likely to be conservative. As it is, MarketBeat's reported consensus for F2025 is about 15% below the mid-point of the guidance range, setting the company up to significantly outperform. The chart action since the report is also bullish. The charts indicate a market that has bottomed and is poised for a complete reversal. The critical resistance point is near $51 and marks the baseline of a double-bottom pattern. If the market moves above this level and holds it, it will likely advance from the baseline by the magnitude of the pattern, which is more than $30. A $30+ advance from $51 aligns this market with its all-time highs and puts it on track for a new high that could be set in 2026. Where Should You Invest $1,000 Right Now? Before you make your next trade, you'll want to hear this. MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. Our team has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and none of the big name stocks were on the list. They believe these five stocks are the five best companies for investors to buy now...
Yahoo
4 days ago
- Business
- Yahoo
NBIS vs. AMZN: Which AI-Infra Stock Seems a Better Pick at the Moment?
Nebius Group N.V. NBIS is an upcoming player in the AI-infrastructure market, while Amazon AMZN is an established tech behemoth. NBIS is a GPU-focused cloud platform, while Amazon dominates the AI cloud space through Amazon Web Services or AWS, the world's leading cloud provider, integrating AI capabilities at scale. Per an IDC report, spending on AI infrastructure is expected to top $200 billion by 2028. This uptrend in spending benefits both Amazon and Nebius, but not equally. So, if an investor wants to make a smart buy in the AI infrastructure space, which stock stands out? Let's break down how each company is performing and which one looks like the better investment right now. Amsterdam-based Nebius is positioning itself as a specialized AI infrastructure company. NBIS also builds full-stack infrastructure for AI, like large-scale GPU clusters, cloud platforms, and tools and services for developers. Collaboration with Saturn Cloud and deeper NVIDIA integration boosts bodes well. NBIS is doubling down on AI infrastructure with an ambitious $2 billion capital expenditure plan for 2025, up from its earlier guidance of $1.5 billion. NBIS stated that the increase was primarily due to some planned fourth-quarter spending shifting into the early first quarter. Nebius is focusing on building a global footprint, with capacity in the United States, Europe and the Middle East amid accelerating demand for its AI-infrastructure services. It added three new regions, including a strategic data center in Israel, in the last reported quarter. In June 2025, NBIS announced private placement of $1 billion in convertible notes to capitalize on the AI-infrastructure boom and drive-up revenue opportunities in 2026. It recently announced the general availability of NVIDIA GB200 Grace Blackwell Superchip capacity for its customers in Europe. NBIS plans to build a data-center infrastructure pipeline that can offer scalability to more than 1 gigawatt ('GW') of capacity. With 1 GW of power, NBIS expects significantly higher revenues beyond its current guidance. To gain a larger share of the AI cloud compute market, NBIS is focusing on technical enhancements that increase reliability and reduce downtime to boost customer retention. In the first quarter, Nebius significantly upgraded its AI cloud infrastructure through improvements to its Slurm-based cluster and its object storage capabilities. The upgraded storage system ensures that big data sets can be easily accessed and saved quickly during model training, directly lowering time-to-result for end users. NBIS successfully graduated multiple platform services like MLflow and JupyterLab Notebook from beta to general availability. Nebius expanded integrations with external AI platforms like Metaflow, D Stack and SkyPilot, enabling customers to migrate tools with nominal friction. Nebius remains confident in achieving its full-year ARR guidance of $750 million to $1 billion. For 2025, the company also reaffirmed its overall revenue guidance of $500 million to $700 million. Nonetheless, the intense competition from behemoths remains a concern, along with profitability Management reaffirmed that adjusted EBITDA will be negative for the full year 2025. Though it added that adjusted EBITDA will turn positive at 'some point in the second half of 2025.' While NBIS is an early-stage player, Amazon is one of the dominant names in the AI cloud infrastructure space with its AWS platform. AWS revenues surged 17% year-over-year in the first quarter of 2025, with an annualized revenue run rate pegged at $117 billion. AWS backlog reached $189 billion with a 4.1-year weighted average life, offering forward revenue visibility. In the last reported quarter, AWS signed new agreements with major companies, including Ericsson, Adobe, Uber Technologies, Nasdaq, Fujitsu and many others. Amazon highlighted that more than 85% of global IT spending is still on-premises, suggesting immense growth potential for AWS. More significantly, Amazon's AI business segment now operates at a multi-billion-dollar annual revenue run rate with triple-digit percentage growth year over year. Amazon's strategy focuses on custom silicon development, particularly its Trainium 2 chips, which offer 30-40% better price performance compared to GPU-based instances. The company has also expanded its AI model offerings through Amazon Bedrock and introduced services like Amazon Nova foundation models. AMZN has added the latest foundation models in Amazon Bedrock, including Anthropic's Claude 3.7 Sonnet, Meta's Llama 4 family of models, DeepSeek's R1 and Mistral AI's Pixtral Large. AMZN is ramping up investment to boost its AI market share. It recently announced it plans to invest up to $20 billion in Pennsylvania to expand its data center infrastructure for AI and cloud computing. Before that, it allocated $10 billion in investments to expand cloud computing infrastructure in North Carolina. However, capacity constraints pose a challenge. Amazon has indicated that AI demand currently outstrips available capacity, suggesting the company could drive higher revenues with additional infrastructure. The intense competition from Microsoft's Azure and Google Cloud is concerning. Heavy capex spend could strain margins if AI returns do not materialize. AMZN shares have gained 2.9% while NBIS' stock has appreciated 25.5%. Image Source: Zacks Investment Research Valuation-wise, both Amazon and Nebius are overvalued, as suggested by the Value Score of D and the Value Score of F, respectively. Image Source: Zacks Investment Research In terms of Price/Book, NBIS shares are trading at 3.52X, lower than AMZN's 7.36X. Analysts have significantly revised their earnings estimates downward for NBIS' bottom line for the current year. Image Source: Zacks Investment Research For AMZN, there is marginal upward revision. Image Source: Zacks Investment Research NBIS and AMZN currently carry a Zacks Rank #3 (Hold) each. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. NBIS is carving out a niche for itself in the AI infrastructure space, while AMZN is a force to be reckoned with. If investors are seeking an AI infrastructure stock with long-term growth potential, Amazon is a better pick. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Inc. (AMZN) : Free Stock Analysis Report Nebius Group N.V. (NBIS) : Free Stock Analysis Report This article originally published on Zacks Investment Research ( Zacks Investment Research
Yahoo
4 days ago
- Business
- Yahoo
Nebius Just Posted 700% ARR Growth - But Can It Survive the GPU Price War?
The explosion of artificial intelligence has sparked a race to build the cloud infrastructure that powers AI models. Two emerging competitors, Nebius Group (NASDAQ:NBIS) and CoreWeave (NASDAQ:CRWV), have stepped onto this stage as alternatives to the traditional hyperscalers, Amazon AWS (NASDAQ:AMZN), Microsfot (NASDAQ:MSFT) Azure, Google (NASDAQ:GOOG) (NASDAQ:GOOGL). Both focus on GPU-centric cloud services built for AI, but they differ sharply in strategy, geography, and financial structure. In this article, I will break down Nebius's business model, technology stack, and expansion roadmap and evaluates how it stacks up against CoreWeave and the broader GPUaaS market. Nebius Group emerged in 2024 following the breakup of Russia's Yandex. The Amsterdam-based firm was rebranded from Yandex N.V. (Yandex's Dutch parent) after it divested its Russian operations for $5.4 billion. At its core, Nebius delivers cloud-based graphics processing unit (GPU) compute, primarily using Nvidia (NASDAQ:NVDA) hardware, for AI model training and inference. In essence, Nebius offers Nvidia GPU clusters on demand, along with a suite of AI development tools. But Nebius isn't just about raw compute. The company offers an integrated AI platform, supporting Nvidia's AI Enterprise suite and machine learning operations (MLOps) tooling. In June 2025, it partnered with Saturn Cloud to launch an AI-first MLOps cloud, reinforcing its ambition to build an end-to-end ecosystem. While 75% of revenue stems from its core AI cloud, Nebius has three other segments: Toloka, a data-labeling platform backed by Bezos Expeditions, TripleTen, an edtech coding bootcamp, and Avride, an autonomous driving software effort. These units may not yet move the financial needle, but they provide vertical integration and long-term optionality. Source: Nebius The company targets AI-native startups, labs, and enterprises seeking scalable infrastructure, similar to rivals like Lambda and CoreWeave. Nebius has highlighted partnerships and pilot customers rather than naming large established clients so far. Saturn Cloud is a good example: it bundles Nebius's compute with user-friendly dev tools. Another example is Nebius's Toloka platform, which secured an investment from Bezos Expeditions (the personal venture fund of Jeff Bezos) in May 2025 a signal that Nebius's ecosystem (in this case, an AI data labeling service) has caught the attention of major tech investors. That approach also gives Nebius a very different customer mix than CoreWeave. While CoreWeave generated 77% of its 2024 revenue from just two clients (Microsoft alone accounted for 62%), Nebius has no such concentration. Its customer base is broader. On the technology stack, Nebius is betting heavily on Nvidia hardware and associated software. Nebius offers Nvidia's top-tier GPUs such as the A100 and H100 today, and it has announced early access to next-generation chips like the Nvidia H200 and Blackwell GPUs in its pipeline. In fact, Nebius claimed to be the first in Europe to deliver general availability of Nvidia's Blackwell architecture, signaling a close partnership with Nvidia. The cloud platform itself includes compute instances with Nvidia GPUs, high-performance networking, and distributed storage. The explosion in generative models like ChatGPT, Stable Diffusion, and enterprise LLMs has triggered a global GPU arms race. Training or fine-tuning these models requires thousands of high-end GPUs, like the H100 or Blackwell, each priced upwards of $30,000. But GPUs alone aren't enough. Running them efficiently requires liquid cooling, low-latency networking, high-throughput storage, and technical talent that most organisations can't afford. Enter GPU-as-a-Service (GPUaaS). This model allows companies to lease high-performance GPUs on demand, avoiding the upfront capital and infrastructure burden. GPUaaS enables startups, researchers, and enterprises to scale workloads elastically, whether training models from scratch, fine-tuning open-source architectures, or running inference at scale. It's cost-efficient, scalable, and strategic. But why use Nebius or CoreWeave instead of simply calling OpenAI or Anthropic? The answer lies in control, cost, and flexibility. Using OpenAI's APIs locks users into a black box (limited customisation, no control over latency or inference logic, and costs that scale poorly at volume). GPUaaS providers like Nebius unlock a different path. One where companies can train or fine-tune their own models, maintain full IP ownership, and optimise performance for their specific workloads. It's the difference between renting pre-packaged software versus owning your tech stack. For AI-native startups, research institutions, and even mid-size enterprises with proprietary data, that control is critical. Since mid-2024, Nebius has been executing on ambitious expansion plans, especially across Europe. The company announced it will invest over $1 billion by mid-2025 to build out AI infrastructure in Europe. Nebius already operates a major data center in Finland (a holdover from Yandex Cloud). In 2024, Nebius began expanding the Finland facility to increase capacity. It also signed letters of intent for two additional data centers in Europe. One concrete project is a new GPU cluster in Paris, France, which Nebius says will offer Nvidia GPUs to European customers. This Paris region gives Nebius a presence in Western Europe's heart, likely aiming to attract EU-based AI startups and enterprises that prefer their data to stay within EU borders. In June 2025, after Nvidia CEO Jensen Huang said the United Kingdom (UK) is in a Goldilocks circumstance and he would invest there. After that, Nebius officially launched its services in the UK, marking its entry into the British market. As part of the UK launch, Nebius highlighted that it's bringing the latest Nvidia Blackwell Ultra GPU systems to British soil. By offering the newest GPUs (even before many competitors), Nebius is courting the UK's AI developers who need top-tier compute. The UK expansion also likely involves setting up a local office and partnerships to integrate into Britain's AI ecosystem. With Nvidia announcing several commitments and increasing awareness about the UK AI infrastructure, and helping Nebius to deploy new facilities in the country will be a great opportunity for Nebius. Nebius isn't stopping at Europe. The company has quietly begun expanding into North America as well. In early 2025, it opened its first U.S. GPU cluster in Kansas City to meet surging AI compute demand. Nebius will compete in the home market of CoreWeave, AWS, and other American providers, leveraging perhaps a cost advantage or available capacity to carve out a niche. Its Finnish data centre is being scaled to support up to 60,000 GPUs, while its new U.S. site in Kansas City could host up to 35,000 more. These clusters are optimised for AI compute, using NVIDIA H100s, H200s, and the upcoming Blackwell line. Of course, expansion at this scale requires immense capital. Nebius's spending plans include $600 million to $1.5 billion of capital expenditures in the near term to increase capacity in Finland, build out France, and also move into North America. To fund this, Nebius has tapped its cash reserves and raised new funds. In late 2024, Nebius secured $700 million in a private placement from investors including Nvidia and Accel, issuing new shares at $21 each. And in June 2025, it raised an additional $1 billion via convertible notes to bolster its liquidity. Nebius's most direct rival is CoreWeave, the U.S.-based cloud provider that has carved out a strong position as a specialist in GPU computing. Both companies are GPU-native infrastructure providers built from the ground up to serve AI developers, and both emerged outside the hyperscaler ecosystem. But beyond that shared DNA, their strategies diverge sharply. CoreWeave started in 2017 and pivoted from cryptocurrency mining to GPU cloud services. Since then, it has ridden the generative AI wave to astonishing heights. Revenue surged from just $25 million in 2022 to $229 million in 2023 and $1.92 billion in 2024. This 8 annual growth in 2024 reflects CoreWeave's key role in supplying compute to AI firms. For instance, it reportedly secured a major contract to provide infrastructure to OpenAI in 2023, stepping in to fill capacity gaps left by the hyperscalers. At one point, spot-market GPU prices reached $8/hour for top chips. CoreWeave capitalised on that spike by procuring hardware at any cost, including used GPUs from crypto miners and massive forward orders of H100s. Nebius, by contrast, entered the market in 2024 but with unique advantages. Rather than building from scratch, it inherited Yandex's cloud platform, engineering talent, and a sizable capital base following the $5.4 billion divestment of its Russian business. While CoreWeave raised over $2.3 billion in equity and secured more than $10 billion in debt facilities to finance growth, Nebius has a stronger balance sheet from the outset. With that being said, Nebius can afford to undercut on pricing and invest heavily without immediate pressure to generate profits, whereas CoreWeave, while also growth-focused, carries significant debt and will eventually need higher margins to service it. Both companies rent out GPU-heavy compute instances via the cloud, but Nebius's model is slightly more holistic. In addition to bare compute, it offers a full stack of cloud services (storage, networking, managed databases) and is building partnerships to make its platform more attractive to AI teams. CoreWeave, by contrast, emphasises flexibility and raw performance. It offers virtual machines or containers with GPUs, targeting advanced AI labs that require massive training clusters and already have in-house infrastructure expertise. Source: Nebius In GPUaaS, where infrastructure is increasingly commoditised, price and availability matter. Nebius recently slashed on-demand rates. Its H100 dropped from $4.85/hour to $2.95/hour pay-as-you-go, with further discounts for long-term commitments. CoreWeave's on-demand H100 pricing remains around $4.25/hour, although it offers up to 60% discounts for committed usage. This 45% discount is meaningful, and such a price difference can be very compelling for cost-sensitive customers like AI startups burning investor cash to train models. Source: CoreWeave Interestingly, both companies count NVIDIA as a strategic backer. NVIDIA invested $350 million for a 7% stake in CoreWeave and also participated in Nebius's funding round. This dual alignment signals NVIDIA's intention to support multiple GPU-native cloud providers and maintain high downstream demand for its hardware. That backing also gives both firms early access to next-gen chipsan edge in securing performance-sensitive workloads. Neither Nebius nor CoreWeave builds its own chips (unlike AWS with Trainium or Google with TPUs), but both are innovating in deployment. Nebius, for instance, secured early access to Blackwell GPUs in Europe, likely aided by its speed of execution and strategic positioning. Similarly, CoreWeave was among the first to offer H100s at scale in 2023. Both aim to stay on the bleeding edge of NVIDIA's roadmapand attract customers accordingly. A critical piece of the analysis for any cloud provider is unit economics. How profitable (or not) each unit of service is, and what the cost drivers are. In the context of Nebius and its peers, the unit is often one GPU hour of computation. On the revenue side of a GPU-hour, as noted, Nebius cut its on-demand H100 GPU price to $2.95/hour or even lower with long-term commitments. For comparison, AWS charges around $12.29/hour for an on-demand H100 80GB (depending on region). Now, on the cost side, providing one hour of H100 time involves several components: depreciation or lease costs for the GPU hardware, electricity, cooling, infrastructure overhead, and some share of staffing and maintenance. Assuming a $30,000 price tag for an Nvidia H100 80GB and a 3-year capital recovery period, that's $833 per month. At 730 hours/month (247 uptime), that equates to $1.14 per hour just to break even on the hardware. In practice, utilisation isn't 100% (there will be some idle or reserved time), and there are significant power/cooling costs. An H100 can draw 300 to 400 watts under load. At $0.05$0.10 per kWh, electricity costs range from $0.15 to $0.30/hour. Add cooling and networking overhead ($0.10/hour), and total operational costs sit between $0.20 and $0.40/hour. Server CPUs, memory, and networking per GPU add further costs, though relatively minor on a per-hour basis. Bringing this together: if Nebius averages $2.20/hour per H100 (blended between on-demand and committed use) and runs at 80% utilisation, it generates $1.76/hour. With $0.32 in variable opex and $1.14 in depreciation, that leaves $0.30 of gross margin per available hour. Over a year (8,760 hours), this adds up to $15,400 in revenue and $12,600 in gross cash flow, enough to recoup the GPU investment in just under 2.5 years, excluding staff and overhead. At CoreWeave's $4.25/hour, the math looks different. At 80% utilisation, it earns $3.40/hour, about $22,500 annually per GPU. That allows for a 1.3-year payback, assuming similar cost assumptions. But I would expect the higher price tag may reduce utilisation. From a capex efficiency standpoint, Nebius may have structural advantages. First, its balance sheet: it holds $1.4 billion in net cash, while CoreWeave carries $6.2 billion in net debt. CoreWeave's debt-servicing costs add to its effective GPU-hour cost. Second, Nebius can build where costs are lowest. For example, its Finnish data centre benefits from ambient air cooling and access to low-cost nuclear and hydro power. Finland's industrial electricity rates (0.05 to 0.07/kWh) are highly competitive, even versus many U.S. regions. Further Nordic or Eastern European expansion could enhance this edge. Crusoe, for example, takes this to the extreme, placing data centres at oil wells to tap into otherwise flared gas. Another factor in unit economics is utilization rate. One challenge for Nebius is to attract enough workloads to keep tens of thousands of new GPUs busy. However, the company's latest disclosures show extremely strong uptake. By April 2025, Nebius's Annualized Run-Rate Revenue (ARR) reached $310 million, up from $249 million in March. This implies that newly added GPUs were getting filled with work rapidly. Nebius's ARR was growing 684% year-on-year (YoY) as of Q1 2025, indicating that as soon as Nebius deploys more capacity (e.g., a new cluster online), it's seeing customers take it up, likely attracted by the combination of availability and price. GPU mix also plays a role. While H100s are the flagship, Nebius offers older and mid-range GPUs too, like A100s, L40s, or A10s. Many of these were acquired second-hand from miners. A GPU like the A10, which costs $3,500, might rent at $0.75/hour. At 80% utilisation, it brings in $5,200/year, allowing the investment to be recouped in less than 12 months. These legacy GPUs offer higher ROI and subsidise thinner margins on cutting-edge chips. CoreWeave and Lambda Labs use similar strategies. Older GPUs like the A6000 or RTX 3090 have long since paid for themselves, but still rent out at attractive rates. These high-margin units improve blended economics and cushion the break-even curve on H100s or Blackwells. Nebius's revenues are starting from a relatively small base but are growing at an extraordinary pace. In Q1 2025, the company reported revenue of $55.3 million, up 385% year over year, while ARR surged nearly 700% YoY, reaching $310 million by April 2025. This growth, however, comes at a cost: Nebius remains in investment mode and is still loss-making as it builds out infrastructure. In Q1 2025, it posted an adjusted EBITDA loss of $62.6 million and a net loss from continuing operations of $113.6 million. That's wider than the $80.5 million loss in the same period last year, driven by increased operating expenses and depreciation. Still, there are early signs of operating leverage: opex as a percentage of revenue improved from an unsustainable 827% in Q1 2024 to 334% in Q1 2025, an indication that Nebius is gaining scale efficiency even as absolute costs rise. Cash burn remains high. Operating cash outflow reached $197.8 million in Q1 2025 alone. But Nebius's balance sheet is strong. It holds $1.5 billion in cash and cash equivalents against just $6.2 million in debt, providing a solid funding runway. Management has guided for full-year 2025 revenue of $500 to $700 million, potentially 5 higher than 2024 levels, with ARR approaching $1 billion. Longer term, the company targets a 30% adjusted EBIT margin, with room for additional upside as utilisation and gross margins improve. When Nebius re-listed on Nasdaq in October 2024, shares initially traded around $20, giving the company a market capitalization of roughly $4 billionabout where Yandex N.V. had been pre-suspension. At that price, with 2024 revenue at $118 million, Nebius was valued at an eye-watering 34 trailing price-to-sales (P/S). Even on a forward basissay, $600 million in projected 2025 revenue, that implied a 7 forward P/S. A modest multiple for a company growing at 400%+. Investors, drawn by the company's hypergrowth and AI focus, quickly bid up the stock in 2025. Today, Nebius trades at $47, giving it a market cap of $11 billion. At this price, the forward P/S climbs to 18. The EV/Revenue multiple is slightly lower, thanks to Nebius' $1.5 billion in net cash, which brings enterprise value down to $9.7 billion, equating to 16 2025E revenue. Another lens is ARR. At $310 million in April 2025, Nebius trades at 35 ARR. This multiple reflects the market's expectation of sustained exponential growth, justified, to some extent, by its 684% YoY ARR growth at last disclosure. CoreWeave, by comparison, has $2.7 billion in trailing revenue and is valued at around $71 billion, implying a trailing P/S of 26 and a forward P/S closer to 14. GPU count provides another useful valuation reference. Nebius currently has 30,000 GPUs and plans to add up to 60,000 in Finland and another 35,000 in Kansas City. At today's EV, that works out to $324,000 per GPU. CoreWeave, with an enterprise value of $76.9 billion and 250,000 Blackwell GPUs allocated, trades at $307,000 per GPU. On a per-GPU basis, Nebius looks slightly more expensive. However, that spread may be justified by Nebius's capital structure. Unlike CoreWeave, which is heavily levered, Nebius is deploying GPUs primarily through cash, implying less financial risk and potentially better long-term margins. In that context, investors could rationally pay more per GPU for Nebius. It's also worth noting: this valuation assumes Nebius's market cap reflects only its AI Studio business. If you assign any value to Toloka, TripleTen, or Avride, Nebius's implied EV per GPU drops below CoreWeave's. In that sense, the headline multiple overstates how richly Nebius is valued for its core cloud operations alone. Finally, Nebius isn't just attracting retail momentumseveral institutional investors and well-known funds are getting behind the story. In the most recent quarter, John Hussman (Trades, Portfolio), Jefferies Group (Trades, Portfolio), and Paul Tudor Jones (Trades, Portfolio) all increased their stakes in the company, suggesting rising institutional confidence in Nebius's long-term positioning. While Nebius offers a compelling avenue to participate in the AI compute boom, the path from promise to profit is far from guaranteed. The first hurdle is execution. Scaling the fleet from ~30,000 GPUs to more than 60,000 across Finland, the U.K., and a new U.S. cluster will require flawless logistics, uninterrupted chip supply, and enterprise-grade reliability. That leads into a second, more fundamental concern: utilisation risk. Nebius's economic model depends on sustaining high GPU usagetypically around 80%to make the unit economics viable. But that level of utilisation isn't assured. CoreWeave, AWS, Google Cloud, and niche players like Lambda Labs are all aggressively competing for GPU workloads. Pricing pressure, customer churn, or simple overbuild could impair Nebius's ability to monetise its fleet efficiently. Finally, Investors should also be aware that many view Nebius and its peers as AI compute landlords, by essentially renting GPUs like digital REITs. However, there's a key distinction. While REITs benefit from physical assets that depreciate slowly over decades, GPU hardware becomes obsolete within two to three years. The capital turnover is faster, the risk of stranded assets is higher, and the need to reinvest in cutting-edge chips like Blackwell or H200 is constant. Nebius isn't just another AI infrastructure play. It's a true challenger in a market long dominated by hyperscalers. Its explosive growth, capital-light balance sheet, and global-first strategy set it apart from competitors like CoreWeave and Lambda. It also offers some diversification through its other business segments. While its GPU fleet is smaller for now, Nebius's cost advantages and platform breadth provide a credible path to scale. If management executes and demand for AI compute continues to accelerate, today's $12 billion valuation could prove to be a stepping stone, not a ceiling. Ultimately, the AI gold rush won't reward every miner. The winners will be infrastructure providers that combine scale, capital efficiency, and customer-focused design. Nebius is building toward that vision, and it's already secured a seat at the table. I believe Nebius could be a market-beater over the long term. This article first appeared on GuruFocus. Error while retrieving data Sign in to access your portfolio Error while retrieving data Error while retrieving data Error while retrieving data Error while retrieving data
Yahoo
6 days ago
- Business
- Yahoo
1 Growth Stock That Could 5x Your Money in 10 Years
Retail investors should focus on the long term. Long-term investing is easier to get right and allows investors to be early to promising opportunities. This artificial intelligence (AI) stock has multibagger potential, and the valuation is somewhat reasonable in the high-flying sector. 10 stocks we like better than Nebius Group › In most regards, retail investors are at a big disadvantage to professional investors working at hedge funds. They typically aren't as well-trained; they likely don't have as much time to conduct research or nearly the same amount of resources at their disposal. One major advantage, however, is that time is on their side. While hedge funds typically invest over a 12-to-18-month time horizon, retail investors can buy stocks they want to hold for five, 10, or even 20 years. This allows retail investors to buy stocks early and patiently wait for the catalysts to play out and for businesses to develop. Here's one stock to buy that can 5x your money in 10 years. When companies have serious ties to artificial intelligence (AI), their stocks are usually gobbled up before most retail investors take notice, resulting in stretched valuations that are often unappealing. But unlike most AI names, investors have had the chance all year to buy Nebius Group (NASDAQ: NBIS) at very attractive or at least reasonable valuations. While investors have started to catch on and the stock is now up 70% this year, Nebius, at a $11.4 billion market cap, still presents a compelling long-term opportunity. Nebius builds data centers specifically aimed at helping customers launch AI solutions. The company's data centers purchase graphics processing units (GPUs) from major chip players like Nvidia, and then allow companies to essentially rent their infrastructure to build and run AI languages and applications on. For companies that would prefer to not have to set up their own AI infrastructure or need additional capacity, the arrangement is quite appealing. While this is Nebius' main business, the company also has some other smaller, developing businesses, like its generative AI development business, Toloka, and an autonomous driving technology business. The stock traded extremely cheaply when it rejoined the Nasdaq toward the end of last year, because it hadn't traded on the Nasdaq for close to three years. Nebius used to be owned by Russian internet giant Yandex. When Russia invaded Ukraine, U.S. sanctions on Russia led to the delisting of many Russian stocks. Since that time, however, Nebius split off from Yandex in a $5.4 billion deal that would see the company move its headquarters to Amsterdam. In December, Nebius announced that it had raised an oversubscribed private round of financing led by Nvidia and other major venture capital companies, which seemed to give the company more credibility and the market more confidence in the name. Nebius also has a partnership with Nvidia. This month, Nebius unveiled a flurry of positive news events. The company raised $1 billion in additional capital through convertible notes to accelerate growth and recently announced expansion in the United Kingdom, as well as the general availability of Nvidia's next-generation Blackwell chips in Europe. In the first quarter of the year, Nebius reported over $55 million of revenue, up 385% year over year, although the company's net loss grew 41% to close to $114 million. The company invested significantly in the quarter, and operating costs nearly doubled on a year-over-year basis, as capital expenditures (capex) and increased spending on data center hardware led to a more than fourfold increase in depreciation and amortization. However, Nebius is growing fast and has expanded its data center network, adding four new locations in Europe, the U.S., and the Middle East over the last three quarters, not including its planned GPU cluster in the United Kingdom. Furthermore, management said they remain on track to exit the year with $750 million to $1 billion of annual run-rate revenue. Management also said they expect to become positive on an adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) basis in the second half of this year. In the medium term, management projects to reach mid-single-digit billions of dollars in revenue, with adjusted EBIT margins in the 20%-30% range, assuming a four-year depreciation schedule. Obviously, the company still needs to execute, and the AI trade and AI capex could see some ebbs and flows and may not work in a straight line. But overall, Nebius is growing fast and meaningfully growing revenue, and its use case is resonating strongly in one of the most promising sectors of the market. Before you buy stock in Nebius Group, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Nebius Group wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $653,702!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $870,207!* Now, it's worth noting Stock Advisor's total average return is 988% — a market-crushing outperformance compared to 172% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of June 9, 2025 Bram Berkowitz has positions in Nebius Group. The Motley Fool has positions in and recommends Nvidia. The Motley Fool recommends Nebius Group. 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Globe and Mail
6 days ago
- Business
- Globe and Mail
1 Growth Stock That Could 5x Your Money in 10 Years
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Investors seeing the light in this AI company When companies have serious ties to artificial intelligence (AI), their stocks are usually gobbled up before most retail investors take notice, resulting in stretched valuations that are often unappealing. But unlike most AI names, investors have had the chance all year to buy Nebius Group (NASDAQ: NBIS) at very attractive or at least reasonable valuations. While investors have started to catch on and the stock is now up 70% this year, Nebius, at a $11.4 billion market cap, still presents a compelling long-term opportunity. Nebius builds data centers specifically aimed at helping customers launch AI solutions. The company's data centers purchase graphics processing units (GPUs) from major chip players like Nvidia, and then allow companies to essentially rent their infrastructure to build and run AI languages and applications on. For companies that would prefer to not have to set up their own AI infrastructure or need additional capacity, the arrangement is quite appealing. While this is Nebius' main business, the company also has some other smaller, developing businesses, like its generative AI development business, Toloka, and an autonomous driving technology business. The stock traded extremely cheaply when it rejoined the Nasdaq toward the end of last year, because it hadn't traded on the Nasdaq for close to three years. Nebius used to be owned by Russian internet giant Yandex. When Russia invaded Ukraine, U.S. sanctions on Russia led to the delisting of many Russian stocks. Since that time, however, Nebius split off from Yandex in a $5.4 billion deal that would see the company move its headquarters to Amsterdam. In December, Nebius announced that it had raised an oversubscribed private round of financing led by Nvidia and other major venture capital companies, which seemed to give the company more credibility and the market more confidence in the name. Nebius also has a partnership with Nvidia. Growing fast This month, Nebius unveiled a flurry of positive news events. The company raised $1 billion in additional capital through convertible notes to accelerate growth and recently announced expansion in the United Kingdom, as well as the general availability of Nvidia's next-generation Blackwell chips in Europe. In the first quarter of the year, Nebius reported over $55 million of revenue, up 385% year over year, although the company's net loss grew 41% to close to $114 million. The company invested significantly in the quarter, and operating costs nearly doubled on a year-over-year basis, as capital expenditures (capex) and increased spending on data center hardware led to a more than fourfold increase in depreciation and amortization. However, Nebius is growing fast and has expanded its data center network, adding four new locations in Europe, the U.S., and the Middle East over the last three quarters, not including its planned GPU cluster in the United Kingdom. Furthermore, management said they remain on track to exit the year with $750 million to $1 billion of annual run-rate revenue. Management also said they expect to become positive on an adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) basis in the second half of this year. In the medium term, management projects to reach mid-single-digit billions of dollars in revenue, with adjusted EBIT margins in the 20%-30% range, assuming a four-year depreciation schedule. Obviously, the company still needs to execute, and the AI trade and AI capex could see some ebbs and flows and may not work in a straight line. But overall, Nebius is growing fast and meaningfully growing revenue, and its use case is resonating strongly in one of the most promising sectors of the market. Should you invest $1,000 in Nebius Group right now? Before you buy stock in Nebius Group, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Nebius Group wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $653,702!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $870,207!* Now, it's worth noting Stock Advisor 's total average return is988% — a market-crushing outperformance compared to172%for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of June 9, 2025
