Nebius (NBIS) is making waves in the artificial intelligence (AI) infrastructure space, with its cloud capacity selling out rapidly and its stock price skyrocketing by 218% year to date. The company has secured multibillion-dollar contracts with tech giants like Microsoft and Meta Platforms, signaling a potential for significant growth in the coming years.
Nebius specializes in building full-stack AI infrastructure and operating a cloud platform tailored for intensive AI workloads, powered by Nvidia hardware. Its core business involves selling cloud capacity to Big Tech companies and AI startups, enabling them to train and run large AI models. Additionally, Nebius owns and operates brands such as Avride, an autonomous driving company, and TripleTen, a tech education firm, while also holding equity stakes in other companies like ClickHouse and Toloka.
In its Q3 results, Nebius displayed impressive growth, with group revenue reaching $146 million, a 355% increase year-over-year. The core infrastructure business, which contributes over 90% of revenue, saw a 400% surge year-over-year, with adjusted EBITDA margins climbing to nearly 19%. CEO Arkady Volozh highlighted the high demand for capacity, with every unit brought online quickly selling out. The company’s revenue growth is only limited by the rate at which additional capacity can be added.
The recent partnerships with Meta Platforms and Microsoft, each worth billions of dollars, underscore the immense demand for Nebius’ Nvidia-powered AI infrastructure. These deals, along with the company’s focus on product development and expanding capacity, position Nebius for significant growth in the AI cloud market. Nebius aims to reach 2.5 GW of contracted power by 2026 and achieve an annualized run rate of $7 billion to $9 billion by the end of next year.
While Nebius stock has received a “Moderate Buy” rating from analysts, with a potential upside of 81% from current levels, investors should note that the company remains unprofitable and may be better suited for those with a high risk tolerance. As Nebius continues to capitalize on the expanding AI cloud market and scale its operations, it remains a stock to watch closely for potential growth opportunities.
This article was originally published on Barchart.com and all information provided is for informational purposes only.
