Key Takeaways
- Nebius is a full-stack artificial intelligence (AI) infrastructure company that provides enterprises with on-demand access to high-end graphics processing units (GPUs) for training and inferencing AI models.
- The company has seen significant growth, with shares soaring by over 207% so far this year and potential for further rallies in the coming months.
- Nebius has strong execution, with third-quarter revenues increasing by 355% year over year to $146 million, and exceptional demand visibility with major deals with Meta Platforms and Microsoft.
- Analysts forecast significant revenue growth, with projected revenues surging from $555.9 million in 2025 to $27.1 billion in 2031.
- The company’s valuation is currently lofty, but if its top line follows its expected growth path and its P/S multiple compresses to 8.5 in 2031, its market capitalization could be above $230 billion, making it a potential 10-bagger stock.
Introduction to Nebius
Nebius is a full-stack artificial intelligence (AI) infrastructure company that provides enterprises with on-demand access to high-end graphics processing units (GPUs) for training and inferencing AI models. The company’s cloud platform offers a unique solution to the growing demand for AI infrastructure, and its shares have reflected this, soaring by over 207% so far this year. With a strong execution and exceptional demand visibility, Nebius is poised for significant growth in the coming months and years.
Growth Drivers
One of the main growth drivers for Nebius is its ability to address the chief bottleneck in the global AI infrastructure buildout: electricity availability. To address this constraint, the company has announced plans to secure 2.5 gigawatts of contracted power by the end of 2026, up from its previous goal of 1 gigawatt. Additionally, Nebius has already presold much of the capacity at its soon-to-be-opened data centers in the United Kingdom and Israel, which will be fitted with Nvidia’s latest Blackwell GPUs. This demonstrates the company’s ability to quickly convert its new capacity into revenue, with third-quarter revenues increasing by 355% year over year to $146 million.
Demand Visibility
Nebius enjoys exceptional demand visibility, with major deals with Meta Platforms and Microsoft. The company has entered into a $3 billion, five-year deal to supply processing power to Meta Platforms and a $17.4 billion, five-year deal with Microsoft. These deals provide a significant boost to the company’s revenue outlook, with an annualized run rate of between $7 billion and $9 billion expected by the end of 2026. This strong demand visibility is a key factor in the company’s potential for significant growth in the coming years.
Financial Projections
Analysts forecast significant revenue growth for Nebius, with projected revenues surging from $555.9 million in 2025 to $27.1 billion in 2031. While the company’s valuation is currently lofty, with a price-to-sales ratio of nearly 64, it is possible that the company’s top line will follow its expected growth path and its P/S multiple will compress to 8.5 in 2031, in line with the valuation of an average data center real estate investment trust (REIT). If this scenario plays out, the company’s market capitalization could be above $230 billion, making it a potential 10-bagger stock.
Conclusion
Nebius is a smart investment opportunity for those looking to profit from the AI infrastructure buildout. With its strong execution, exceptional demand visibility, and significant growth potential, the company is poised for significant growth in the coming months and years. While the company’s valuation is currently high, its potential for growth and compression of its P/S multiple make it an attractive investment opportunity. As the demand for AI infrastructure continues to grow, Nebius is well-positioned to capitalize on this trend and provide significant returns for investors.