WebSlinger
2 weeks ago
Crossroads Capital: Research Report
Conclusion
Nebius represents a compelling investment opportunity at a critical juncture in the AI infrastructure market, with multiple call options on what could be a leading full-stack AI platform. Still seen as a newcomer, the company has extensive experience in AI cloud services. With a highly capable management team led by founder Arkady Volozh and a proven ability to execute complex strategic pivots, Nebius is well-equipped to scale rapidly while navigating the complexities of a fast-evolving market. Despite its origins in Yandex and the lingering perception of its Russian ties, Nebius has successfully redefined itself as a Western-focused, growth-oriented enterprise, operating independently with a significant cash balance and no debt. This financial flexibility, coupled with a strategic partnership with Nvidia, positions the company to overcome execution and financing challenges, scale its GPU capacity, and achieve significant ARR growth beyond 2025. Catalysts over the next 12 months – including equity/debt financing for GPU capacity expansion, potential anchor customers, strategic asset sales, and an IPO of its closest peer CoreWeave – are likely to drive a meaningful re-rating of the stock. As of December 5, 2024, Nebius is trading at ~$31/share. With a blended valuation of $100/share, we believe there is conservatively ~95% upside. Should the company scale similarly to CoreWeave we believe a Bull Case of $179.50/share, or ~475% upside is possible. Additionally, the potential increase in per-share value from the company's plans for Avride ranges from $9/share to potentially exceeding Nebius's current share price.
https://www.crossroadscap.io/documents/from-russia-with-cash-nebius-group
WebSlinger
2 weeks ago
Accel: Our Investment in Nebius
The AI wave is reshaping industries and driving innovation in all aspects of life—from strengthening mission-critical processes to generating random images for fun. The common thread behind all this is our dependence on reliable, scalable infrastructure to power AI workloads. Training and inference require immense computational resources, and AI platforms built on top of a GPU cloud have become a foundational pillar to fuel this era of rapid innovation.
Today, we’re excited to announce our investment in Nebius, a full-stack AI-native platform built for intensive AI & ML workloads. While Nebius may be a new name to some, there is nothing green about this team. For years, they honed their craft, building one of the top infrastructures at scale and gaining a reputation as some of the best hardware and software engineers globally. With this background, Nebius is notable for its ability to deliver a vertically integrated solution that is owned, operated, and endlessly optimized from the data center to the cloud platform.
We’ve been fortunate to have known the Nebius team since its early days. Our founder, Jim Swartz, introduced us to Nebius founder Arkady Volozh as he put together the business plan. While Arkady’s track record speaks for itself—founding and scaling Yandex to over $30bn in market cap—what immediately stood out to us was his drive to go again and his quiet confidence that this time will be bigger. For over a year, we have followed the admittedly unique story of Nebius, a global team of some 400 engineers with significant resources to allocate to growth and deep industry relationships but with the mentality and hunger of a startup. After numerous meetings in SF, London, Amsterdam, and even a trip to the snowy town of Mäntsälä, Finland, to visit their first data center, we found ourselves sharing in that same quiet confidence over what they could achieve.
We believe that software will increasingly become a key purchase criterion, and the demands will expand. Further, as the market broadens to the enterprise, we expect that a full-stack solution will become necessary. Whether delivering bare metal at scale or the full AI platform, Nebius is well-positioned to serve all ends of the market. Finally, as data sovereignty is increasingly a priority for nations, Nebius’ strong foothold in Europe and the US aligns with the need for trusted, localized solutions.
AI infrastructure is just the tip of the iceberg. Beyond the core Nebius AI-native cloud business, Nebius Group is home to exceptional talent driving innovation across adjacent domains. These teams have helped develop leading technology that has formed independent companies, such as Avride (delivery robots and robotaxis), Clickhouse (open-source column-based DBMS), Toloka (data for genAI), and TripleTen (edtech).
We are excited to partner with Arkady, this group of talented, humble engineers and operators, and our friends at Nvidia. In a world where every company will leverage AI, Nebius is positioned to become an important utility of the AI age.
WebSlinger
2 weeks ago
Motley Fool: 1 Nvidia-Backed Artificial Intelligence (AI) Stock to Buy Hand Over Fist in 2025 (Hint: It's Not SoundHound AI)
Jan 6, 2025
Key Points
- Nebius is an artificial-intelligence infrastructure company based in Amsterdam.
- It was divested from Russian internet firm Yandex and recently listed on the Nasdaq.
- While Nebius is fairly small, it could see notable growth fueled by Nvidia's Blackwell GPU launch.
Nvidia just invested in an Amsterdam-based AI infrastructure company.
Generally speaking, when businesses generate excess profits, they may choose to invest in areas such as research and development (R&D), bolster marketing budgets, or increase hiring efforts in certain departments. However, from time to time, a company may invest in other businesses and acquire a small equity stake.
In 2024, a 13F filing revealed that semiconductor giant Nvidia has ownership positions in six publicly traded companies -- Applied Digital, Arm Holdings, Nano-X Imaging, Recursion Pharmaceuticals, Serve Robotics, and SoundHound AI.
Within this portfolio, none has gained more attention than SoundHound. Over the last 12 months, shares of the voice-recognition artificial intelligence (AI) company have soared by 950%. Without a doubt, SoundHound AI is a tempting opportunity for AI investors.
Nevertheless, I'd caution against buying a stock with this magnitude of momentum and instead recommend seeking out alternative ideas. Recently, a company called Nebius Group (NBIS) came to my attention. The main reason I discovered the company? Because Nvidia has an investment in the business.
Below, I'll explain how Nebius and Nvidia are working together and make the case for why this under-the-radar AI stock could be a lucrative opportunity in 2025 and beyond.
Nebius has an interesting history
I wouldn't be surprised if you've never heard of Nebius. However, you might be familiar with Yandex, a company Nebius was affiliated with previously.
Yandex is a Russian-based internet conglomerate, similar to what Alphabet's Google is for the U.S. and many Western nations. Following Russia's invasion of Ukraine in February 2022, the U.S. and European Union imposed a number of sanctions on Russia, many of which were aimed at limiting the country's ability to conduct business with other nations.
In response to these sanctions, Yandex completed a complicated transaction through which it effectively divested its non-Russian assets. As a result, Nebius (which is based in Amsterdam) became an independent entity and listed on the Nasdaq Stock Market back in October.
Following its listing, Nebius announced a private placement on Dec. 2. Per the transaction details, the company issued 33.3 million shares at a price of $21 each, essentially raising $700 million from the likes of Nvidia and venture capital (VC) firm Accel.
The company's growth is impressive, and the outlook is even better
Nebius' primary market is AI infrastructure, building graphics processing units (GPU) clusters and cloud-based platforms. However, the company also operates in other areas, including generative AI, autonomous driving, and technology-based education, through its subsidiaries Toloka, Avride, and TripleTen.
This past October, Nebius reported financials for the third quarter. Revenue increased by 766% year over year to $43.3 million -- with the AI infrastructure business comprising approximately two-thirds of total sales.
Of note, Nebius' cloud business rose almost threefold quarter over quarter and is now operating at an annualized run rate of $120 million. While these numbers may appear a tad small, it's the company's forward guidance that excites me most.
Following the news of its capital raise featuring Nvidia, Nebius' management is projecting the company's annual recurring revenue (ARR) run rate to reach up to $1 billion by the end of 2025.
While this represents a nearly tenfold increase from current levels, keep in mind that liquidity is not an issue for Nebius -- which boasted $2.3 billion of cash and equivalents on the balance sheet as of Sept. 30.
Furthermore, with more than $1 trillion projected to be spent on AI infrastructure in the near term and Nebius' importance in Nvidia's ongoing Blackwell GPU roll-out, I think the company is subtly positioned to have a monster year.
Is Nebius stock a buy in 2025?
Given its limited trading history, investors may understandably have some trepidation scooping up shares in a relatively unknown AI stock. But right now, Nebius' share price of $31 is pretty close to the middle of its high and low points since listing on the Nasdaq a few months ago.
The company has taken proper measures to ensure adequate financial horsepower to meet its near-term goals -- including a $1 billion data center expansion across Paris and Finland, fueled by ongoing demand for Nvidia GPU clusters.
To me, the real lucrative opportunity with Nebius revolves around whether the company can parlay its work with Nvidia by forming partnerships with other large chip players, such as Advanced Micro Devices, and working more closely with cloud hyperscalers, such as Oracle, Microsoft, Amazon, and Alphabet.
I think Nebius' current roadmap is compelling enough for AI investors to consider a position in their portfolio. The company's international presence provides an extra layer of diversification, and its ties to Nvidia certainly don't hurt.
At the end of the day, I think Nebius is one to watch throughout 2025 and could make a great opportunity for patient investors.
https://www.fool.com/investing/2025/01/06/1-nvidia-backed-ai-stock-to-buy-hand-over-fist/
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