Nebius: Why NVIDIA's $2B Bet Cements its AI Leadership

Nebius Group (NBIS) is a leading AI infrastructure company. The rapidly growing company provides the heavy-duty hardware and software infrastructure that ‘hyperscalers’ require to build complex AI models.

Nebius Scores Landmark NVIDIA Investment

Tuesday, Nebius announced a deal with the artificial intelligence leader, NVIDIA (NVDA). As part of the deal, NVIDIA will invest $2 billion directly into Nebius, marking one of its largest investments in the “neocloud” business to date. The details of the NBIS/NVDA deal include:

· Infrastructure Support: The primary goal of the investment is to help Nebius scale its compute capacity.With the $2 billion NVDA investment, NBIS will be able to deploy a massive 5 gigawatts (GW) of NVIDIA-powered compute capacity by the end of the decade.

· International Expansion: Although most of NBIS’s business comes from the United States, the NVDA investment will help the Netherlands-based company to build multiple AI factories globally.

· Technical Collaboration: As part of the agreement, the two companies will work together on AI factory design.

· Ushering in the Agentic AI Revolution: Roughly a year ago, NVIDIA CEO Jensen Huang correctly predicted that agentic AI would become the next wave of the AI revolution. Unlike generative AI chatbots, agentic AI agents work autonomously and can conduct human-like tasks 24/7. As detailed in the deal, the two AI powerhouses will collaborate to create a best-in-class inference and agentic AI stack.

· Access to NVIDIA Products: Finally, because NVIDIA has the best AI technology (by leaps and bounds), its products are often sold out instantly. For Nebius, the real prize is early access to “Rubin”, NVIDIA’s next-generation platform.

Nebius: Big Tech Deals Cement its Market Leadership

Over the past few months, the market has spoken loudly and clearly. Late last year, Nebius scored a $17.4 billion (with potential to be $19.4 billion agreement with Microsoft (MSFT) and a $3 billion agreement with Meta Platforms (META). The size of the deals and the quality of the partnerships mean that NBIS will be an AI leader for years to come.

Zacks Consensus Estimates suggest that NBIS will grow revenue by a staggering 505% in 2026 and 190% in 2027.

Image Source: Zacks Investment Research

NVDA Deal Triggers NBIS Breakout

On Wednesday, the NVDA deal acted as a catalyst for NBIS shares. In early afternoon trading, NBIS shares jumped more than 14% and broke out of a multi-month base structure as volume swelled to more than 200% above the 50-day norm.

Image Source: TradingView

Bottom Line

With the backing of the industry’s most influential players-NVIDIA, Microsoft, and Meta- Nebius group has become an indispensable architect of the AI era. Expect Nebius to flourish further as the AI focus shifts from simple chatbots to sophisticated agentic AI agents.

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This article originally published on Zacks Investment Research (zacks.com).

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