Nebius Group: A Hidden Gem in the AI Infrastructure Boom

The global race to build out AI infrastructure is fueling a $300 billion capital expenditure boom, yet one key player—Nebius Group (NBIS)—remains strikingly undervalued relative to peers. With a market cap of $11.5 billion as of June 2025, Nebius trades at a price-to-sales (P/S) ratio of just 1.3x—far below CoreWeave (CRWV), its rival, which commands a P/S of 30.5x. This disparity, coupled with Nebius' rapid data center expansion, strategic partnerships, and underfollowed status, positions the stock as a compelling entry point ahead of its $55 price target.

Undervaluation Amid Explosive Growth

Nebius' valuation contrasts starkly with peers like CoreWeave, whose premium multiple reflects investor euphoria over AI's potential. While CoreWeave's 30.5x P/S ratio (based on trailing revenue of $2.71 billion) has pushed its stock to $171.93, Nebius' $48.28 share price and $8.8 billion in 2023 revenue (with a 2025 guidance of $500–700 million) suggest it is priced for failure, not growth.

The disconnect is partly due to Nebius' underfollowed status. Just 12 analysts cover the stock, compared to 32 for CoreWeave, leaving room for discovery to drive revaluation. Meanwhile, Nebius' backlog of $18 billion in contracted revenue—driven by partnerships with Nvidia and its Toloka AI data platform—hints at untapped upside.

Growth Catalysts: Data Centers, Partnerships, and Toloka's AI Play

1. Data Center Expansion: Nebius is on pace to double its GPU-accelerated compute capacity by 2026, targeting 500,000 servers. This aligns with its $300 billion industry's demand for scalable AI infrastructure, where CoreWeave's current 250,000 GPU count already faces capacity constraints.
2. Nvidia Partnership: Nebius' exclusive licensing deal for Nvidia's H100 and H200 chips ensures access to cutting-edge AI hardware, a key competitive edge.
3. Toloka's AI Data Growth: The spin-off of Toloka—a data labeling platform used by 30% of Fortune 500 firms—has streamlined Nebius' focus on infrastructure. While Toloka's separation may have temporarily dented reported revenue, it strengthens the core business's scalability.

Why Now? The Undervaluation Is Strategic

Nebius' P/S ratio of 1.3x versus CoreWeave's 30.5x is not merely a valuation gap—it's a signal of mispricing. Nebius' fundamentals align with its valuation:
- Profitability: Unlike CoreWeave, which lost $314 million in Q1 2025, Nebius has a positive net margin, benefiting from Toloka's spin-off and lean operations.
- Debt Management: Nebius' debt-to-equity ratio of 1.2x is far healthier than CoreWeave's 1,262.8%, reducing financial risk.

The Bull Case: $55 Target and the AI Tipping Point

Analysts' $55 price target for NBIS implies a 14% upside from its June 6 close of $48.28. This target assumes Nebius captures 5% of the AI cloud market by 2026, reasonable given its 42% year-over-year revenue growth in Q1 2025 and its $26 billion backlog.

Risks and Considerations

• Execution Risks: Scaling data centers and maintaining partnerships require flawless execution.
• Sector Volatility: AI stocks remain sensitive to macroeconomic shifts and regulatory scrutiny.
• Historical Post-Earnings Underperformance: Backtest analysis reveals that buying Nebius shares on positive quarterly earnings announcements and holding for 20 days from 2020 to 2025 resulted in an underwhelming 8.23% compound annual growth rate (CAGR) and a -58.64% excess return versus a benchmark. This suggests the stock has historically struggled to maintain momentum following positive earnings, adding a layer of caution for short-term traders.

Investment Thesis: A Timely Entry Point

Nebius Group offers a rare blend of secular growth tailwinds, undervaluation, and underfollowed status. At 1.3x P/S—a fraction of its peers—the stock is a contrarian play on AI infrastructure that's yet to fully reflect its potential. With $55 as a near-term target and a sustainable backlog, investors seeking exposure to the AI boom at a bargain price should consider NBIS a priority.

Final Recommendation: Buy Nebius Group (NBIS) at current levels, targeting $55 with a stop-loss below $42. Monitor data center expansion milestones and analyst coverage growth as key catalysts.

This analysis underscores the value of looking beyond headline multiples. In an overhyped AI sector, Nebius' fundamentals and valuation make it a standout opportunity.