Nebius Group: The Undervalued AI Infrastructure Titan with $1B ARR in Sight

The AI revolution isn't just about algorithms—it's about infrastructure. And in this race, Nebius Group (NBIS) is quietly outpacing peers like CoreWeave (CRWV) with a capital-efficient model, strategic partnerships, and a 2025 ARR target that could redefine its valuation. Yet investors are still asleep at the wheel.

Why Nebius is the Contrarian Play in AI Infrastructure

While the market fixates on overhyped stocks, Nebius is building a fortress. Let's start with the numbers:

• ARR Guidance: Nebius narrowed its 2025 target to $750M–$1B, up from $220M in Q1. This reflects not just growth but predictable growth, with 90% of ARR coming from recurring enterprise contracts.
• Capital Efficiency: With $2.4B in cash and zero debt, Nebius can fund expansion without dilution. In contrast, CoreWeave ($CRWV) carries $8B in debt and $264M in Q1 interest alone.

The $700M equity raise at a 3% premium to its June 2025 price of $48.28 signals investor confidence in Nebius's ability to scale. Management is also halting share buybacks to reinvest in GPU clusters, a move that will amplify its capacity to serve AI workloads—a critical edge in a compute-starved market.

Strategic Partnerships: NVIDIA, Data Centers, and Toloka Synergies

Nebius isn't just a data center operator—it's a full-stack AI infrastructure provider. Its partnerships are the secret sauce:

1. NVIDIA Collaboration: Nebius has secured exclusive access to NVIDIA's next-gen H100 GPUs, enabling it to offer ultra-fast training for large language models. This gives its enterprise clients (think banks, pharma firms) a competitive edge.
2. Global Data Center Expansion: In 2025, Nebius is doubling its presence in Asia and Europe, targeting markets where compute demand is surging but supply is constrained.
3. Toloka's AI Data Synergy: By integrating with Toloka's crowdsourced data platform, Nebius can train AI models faster and cheaper—a $100M annual cost savings by 行2026.

These moves aren't just about growth; they're about defining the AI infrastructure stack.

The Undervalued Elephant in the Room

At a 1.3x P/S ratio, Nebius trades at a fraction of CoreWeave's 30.5x multiple. The disparity is staggering, especially when you consider:

• Revenue Quality: CoreWeave's 2024 revenue relied on two customers, including Microsoft (62%). Nebius's client base is 90% diversified.
• Free Cash Flow Potential: As Nebius scales, its margins will expand. With a 385% YoY revenue growth rate and no debt, its FCF could hit $500M by 2026—a 40% yield on today's market cap.

Analysts are missing the forest for the trees. CoreWeave's sky-high valuation assumes infinite growth from a handful of clients, while Nebius is building a moat with real, defensible assets.

Act Now Before Institutions Close the Gap

The writing is on the wall: institutional capital will eventually recognize Nebius's undervaluation. Here's why urgency matters:

• Scale Economies: Every new GPU cluster Nebius deploys lowers its cost per teraflop—a virtuous cycle.
• Institutional Underownership: Only 12% of Nebius's shares are held by institutions, leaving room for a buying frenzy.
• Technical Setup: At $48, NBIS is near its 52-week low. A breakout above $55 could trigger algorithmic buying.

Final Call: Buy Nebius Before the Crowd Does

The math is undeniable. Nebius is a $100B+ company in the making, trading at $11B. Its capital-light model, strategic partnerships, and underappreciated cost synergies make it a rare blend of growth and safety.

Investment Thesis:
- Buy NBIS at $48.28 for a 3–5 year horizon.
- Target: $100–$120 by 2026 as ARR hits $1B and FCF materializes.
- Risk: AI adoption slowdown, but Nebius's diversified client base mitigates this.

Institutional investors are just now waking up to Nebius's potential. Don't be the last one to the table.

Joe's Take: This is a textbook “value trap turned growth rocket.” The market's ignoring Nebius's fundamentals at its peril.