Is Nebius Group a Buy?

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If investing in the artificial intelligence sector feels like trying to assemble IKEA furniture without instructions-only to discover you’ve built a rocket that might actually fly-you’re not alone. The AI sector has become Wall Street’s favorite carnival ride, spinning the S&P 500 to dizzying heights like a particularly enthusiastic carousel operator.

Enter Nebius Group (NBIS), a company that might sound like a Bond villain’s tech startup but is, in fact, a builder of data centers tailored for the AI revolution. Since its Nasdaq debut last October, the stock has surged roughly 465%. But is this the beginning of a grand symphony or merely the tuning of the orchestra?

From Yandex to Nebius: A Corporate Metamorphosis

Let us pause to admire the sheer strangeness of corporate evolution. Nebius began life as a cluster of assets owned by Yandex, Russia’s answer to Google. When geopolitical storms brewed in 2022, these digital seeds were transplanted into Dutch soil via a $5.4 billion deal, sprouting into the entity we now watch with binoculars. It’s the financial equivalent of finding a Fabergé egg in your grandmother’s attic-suddenly you’re the proud owner of something unexpectedly valuable.

Today, Nebius operates six data centers across three continents, including a Finnish facility that likely stays frosty enough to keep GPUs from melting-a happy accident of geography. Their New Jersey outpost, set to open soon, will join colocation sites in Missouri, the UK, Iceland (where server cooling is practically free), and France. These temples of silicon worship house Nvidia’s latest GPU clusters, available for rent to companies building the AI equivalent of skyscrapers.

While competitors focus solely on hardware, Nebius offers tools that help developers train their AI models like overenthusiastic dog trainers. The balance sheet, meanwhile, resembles a cautious librarian’s ledger-modest debt, conservative four-year depreciation schedules for those pricey GPUs. In Q2 2025, revenue hit $105 million (up 625% YoY), though losses widened to $91.5 million. Management now whispers of $900 million to $1.1 billion in annual revenue by year’s end.

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All this changed recently when Microsoft inked a deal worth up to $19.4 billion, stretching from 2026 to 2031. The stock promptly performed a celebratory backflip, surging 50%. CEO Arkady Volozh, sounding like a kid who just discovered extra dessert in his lunchbox, hinted at more partnerships “in the pipeline.”

Valuation: The Price of Tomorrow

Crunching numbers feels like measuring the width of a river while standing on a trampoline. At $24.5 billion market cap, Nebius trades at ~6x projected revenue-a figure that might make value investors flinch but seems reasonable by AI’s hallucinogenic standards. The Microsoft deal alone implies $2.9 billion annual revenue, nudging the company toward a $4 billion run rate when combined with existing projections.

Three factors tilt my compass toward “buy”: First, the Microsoft deal’s sheer scale suggests Nebius has built something uniquely valuable-a digital bakery in a world suddenly obsessed with sourdough. Second, management’s conservative financial stewardship (those four-year GPU depreciation schedules feel like buying a car and expecting it to last through college). Third, Volozh’s tantalizing hints about future deals-though we should treat such promises like a toddler treats balloons: with cautious optimism.

Still, after a 465% rally, this isn’t a “set it and forget it” investment. I’d suggest dollar-cost averaging-buying in installments like sampling wine at a vineyard. Taste regularly, but don’t chug the barrel. 🚀

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2025-09-24 14:27