Nvidia Backed Nebius: A Bargain in AI Data Center Infrastructure

Nvidia-backed Nebius is a data center stock that could be a bargain in the market. The company has a partnership with Nvidia and is a major player in the data center infrastructure market. Nebius is a cloud-based infrastructure services platform that provides access to Nvidia's GPUs. The rising AI infrastructure spend from cloud hyperscalers like Microsoft, Alphabet, and Amazon bodes well for Nebius. The company's ARR run rate grew 684% year over year to $249 million.

Nvidia-backed Nebius Group NV is a technology company that provides infrastructure and services to AI builders worldwide. The company offers Nebius AI, an AI-centric cloud platform providing full-stack infrastructure, including large-scale GPU clusters, cloud services, and developer tools. Nebius Group's strategic investments in data center capacity and cutting-edge NVIDIA GPUs position it as a key player in the AI infrastructure market [2].

The company's recent earnings report highlighted significant revenue growth, with Q4 2024 revenue jumping 466% year-over-year to $37.9 million, and full-year 2024 revenue reaching $117.5 million, a 462% increase from the previous year [2]. Despite these impressive gains, the stock price dropped by over 10% following the report, primarily due to reported losses and cash outflows [2].

Nebius Group's stock price decline could be seen as an overreaction to near-term profitability concerns, presenting an opportunity for long-term investors. The company's reaffirmed projection of $750 million to $1 billion in ARR by December 2025 suggests substantial future revenue growth [2]. Additionally, Nebius is expanding its infrastructure to meet accelerating demand, including the launch of its first U.S. data center in Kansas City, Missouri, by the end of Q1 2025 [2].

The rising AI infrastructure spend from cloud hyperscalers like Microsoft, Alphabet, and Amazon bodes well for Nebius Group. The company's ARR run rate grew 684% year-over-year to $249 million, demonstrating the increasing demand for its AI-as-a-service offerings [2].

Nebius Group's strategic partnerships, such as its preferred cloud service provider status within the NVIDIA Partner Network, further strengthen its market position [2]. The company's autonomous driving division, Avride, holds partnerships with Uber and Grubhub for robot delivery services, while its edtech platform, TripleLen, has established a key partnership with Ascent for education funding [2].

Investors should weigh the risks and rewards of Nebius Group. While the company operates in a high-growth market and has demonstrated impressive revenue growth, it remains unprofitable and faces intense competition from established players like Amazon Web Services, Microsoft Azure, and Google Cloud [2]. The recent stock price decline may offer a strategic entry point for long-term investors who believe in the company's vision and are comfortable with the inherent risks of investing in a growth-stage company in a rapidly evolving sector [2].

References:

[1] https://www.cnn.com/markets/stocks/NBIS
[2] https://www.marketbeat.com/stock-ideas/nebius-group-a-strategic-entry-point-for-investors/
[3] https://nebius.com/blog/posts/q2-2025-nebius-ai-cloud-updates