Nebius Group (NBIS): A Mispriced Option in the AI Infrastructure Boom

In the high-stakes race to dominate AI infrastructure, Nebius Group (NBIS) stands out as a paradox: a company with rocket-fueled growth, fortress-like finances, and strategic assets that appear undervalued by the market. Trading at a mere 3.3x ARR versus peer CoreWeave's 10x EV/Revenue multiple, Nebius presents a rare asymmetric opportunity—15% downside risk versus 400% upside potential—rooted in its real options valuation and strategic mispricing. Let's dissect why this stock is primed to soar.

Valuation Disparity: The Math of Mispriced Growth

Nebius's $7.7 billion enterprise value contrasts sharply with its $1.44 billion cash hoard and $310 million ARR as of April 2025 (with a $1 billion ARR target by year-end). At 3.3x ARR, its valuation is a fraction of CoreWeave's 10x multiple, even though Nebius is growing faster (182% LTM revenue growth vs. CoreWeave's 100%+ growth). This gap isn't justified by fundamentals.

The chart reveals NBIS trading at 1/3 the multiple of CRWV despite comparable growth trajectories. Analysts cite underfollowed status (only 12 analysts vs. CRWV's 32) and a focus on “boring” infrastructure over flashy headlines as reasons for undervaluation.

Fortress Balance Sheet: A Safety Net for Growth

Nebius's $1.44 billion cash pile with zero debt provides a buffer to execute its $1.55 billion 2025 capex plan without dilution. This contrasts with CoreWeave's reliance on debt-funded expansion. The cash also acts as an embedded put option, capping downside risk: if the stock fell to $0, shareholders would still retain ~$1.4B in liquid assets.

Strategic Assets as Call Options: GPU Access & Avride's AI Tech

Nebius's next-gen GPU partnerships (e.g., NVIDIA's Blackwell Ultra chips) and Avride's autonomous vehicle platform are real options with asymmetric payoff potential.

1. GPU Infrastructure: Early access to NVIDIA's cutting-edge chips gives Nebius a price-performance advantage, enabling it to undercut competitors in AI compute pricing. Its 2025 target of 100 MW capacity (expanding to 1 GW mid-term) positions it to capture hyperscaler demand.
2. Avride's Call Option: Avride's autonomous delivery robots (1,200+ daily deliveries at Ohio State) and planned robotaxi pilot with Uber in Dallas are high-beta growth engines. Success here could unlock a standalone valuation, especially as autonomous tech matures.

Risk/Reward: 15% Downside vs. 400% Upside

• Downside: Even if Nebius misses its $1 billion ARR target and trades at 5x ARR (still half CoreWeave's multiple), the stock would be worth $5 billion EV, implying a 15% downside from current levels.
• Upside: Achieving its ARR target and re-rating to 5x ARR would value the company at $5 billion EV, but if it reaches CoreWeave-like multiples, a 10x ARR valuation would push EV to $10 billion, a 29% gain from current levels. However, considering its cash and Avride's potential, a 20x ARR multiple (still below peers) would imply a 160% upside, while a 30x multiple (matching CRWV's premium) would offer a 300% return.

Why Now? The Real Options Catalyst

Nebius's mid-2025 milestones—Iceland data center launch, Avride's Dallas pilot, and Toloka's $6 billion ClickHouse stake—act as trigger events for revaluation. The market's focus on near-term losses (LTM net loss: -$283M) ignores the optionality embedded in its growth.

Investment Thesis: Buy the Discounted Option

Nebius is a call option on the AI boom, priced as if it's a value trap. Its fortress balance sheet, strategic tech partnerships, and undervalued subsidiaries create a safety-first structure with massive upside. For investors willing to bet on execution, NBIS offers a 15% downside cushion against a 400%+ potential upside, making it a no-brainer long-term hold or aggressive growth bet.

Recommendation: Buy NBIS at current levels. Monitor for signs of EBITDA improvement (management expects breakeven by 2026) and Avride's commercialization.

In a market obsessed with overvalued hype, Nebius is the rare gem: a mispriced real option with a margin of safety and a trajectory to re-rate. The question isn't whether AI infrastructure will dominate—it's why investors aren't yet pricing in Nebius's role in that future.