Nebius Group (NBIS): A Hidden Gem in the AI Cloud Race – Why Now is the Time to Buy

The AI infrastructure boom is reshaping the tech sector, and Nebius Group (NBIS) stands at the epicenter of this revolution. Despite its current premium valuation, the company's explosive revenue growth, strategic partnerships, and underappreciated scale advantages position it as a rare “cheap” AI play in today's frothy market. Let's unpack why valuation arbitrage and secular demand in GPU-as-a-Service (GPUaaS) make NBIS a compelling buy.

Valuation Arbitrage: A 10x Multiple Compression Play

Nebius' EV/Sales multiple of 58.05x appears steep at first glance. However, this metric doesn't account for its $750 million to $1 billion annual recurring revenue (ARR) target by year-end 2025, which could slash its forward multiple to just 10x. Compare this to peer CoreWeave's current EV/Sales of 28.9x, and the valuation gap narrows dramatically.

This compression is key. While both companies operate in the same AI neocloud space, Nebius' 385% year-over-year revenue growth (to $55.3 million in Q1 2025) and 684% surge in ARR to $249 million signal a trajectory far outpacing its valuation. Meanwhile, CoreWeave's 420% revenue growth (to $981.6 million in Q1) is already reflected in its higher multiple.

Scale Advantages: The AI Neocloud Leader's Moat

Nebius' competitive edge isn't just about growth—it's about strategic scale. Its partnership with NVIDIA, which backed a $700 million funding round, gives it early access to Blackwell GPUs, the industry's next-generation AI chip. This technology will underpin its 2025 data center expansions, enabling it to serve hyperscale AI workloads more efficiently than rivals.

Moreover, Nebius' $25.9 billion revenue backlog (driven by enterprise contracts) and its majority stake in Toloka, a data-labeling platform backed by Jeff Bezos' Bezos Expeditions, diversify its revenue streams. These assets are underappreciated by the market, creating a valuation asymmetry.

Catalysts for Immediate Upside

1. Blackwell Chip Rollout: Nebius' first-mover advantage with NVIDIA's Blackwell GPUs could secure exclusive contracts with top-tier AI developers, accelerating revenue growth.
2. ARR Milestones: Achieving $1 billion in ARR by 2025 would validate its valuation thesis, likely triggering multiple expansion.
3. Goldman Sachs' $68 Target: Analysts see Nebius' stock climbing 30% from its current $52 price, with upside to $60 if Blackwell adoption exceeds expectations.

Why Now? A Frothy Market's Silver Lining

The AI sector is overheated, with frothy valuations across the board. Yet Nebius' improving margins (operating costs grew 96% vs. 385% revenue growth in Q1) and Goldman Sachs' bullish stance make it a rare exception. Its 10x forward multiple is a steal compared to peers trading at 20x+—a valuation arbitrage opportunity investors can't ignore.

The Bottom Line: Buy the Dip, Target $68

Nebius Group is a buy at $52.01. Its 385% revenue growth, strategic partnerships, and scalable GPUaaS model justify its premium, but the path to a 10x forward multiple offers asymmetric upside. With Blackwell rollouts and data center expansions looming, now is the time to position ahead of the next leg of AI's growth.

Risks: High volatility, margin pressure, and competition from CoreWeave and NVIDIA.

But in a market hungry for growth, Nebius' blend of valuation upside, execution clarity, and secular tailwinds makes it a standout pick. Don't let the 58x multiple scare you—it's a price worth paying for the AI neocloud leader of tomorrow.