Should one consider investing in Nebius' stock, given endorsements from Nvidia and Goldman Sachs?
Nebius, a Dutch company specializing in providing artificial intelligence (AI) cloud infrastructure, has been making waves in the tech industry. The company, which recently received investment backing from Nvidia, is growing rapidly and showing promising signs for investors.
In the first quarter of 2025, Nebius' revenue increased almost fivefold year over year to $55.3 million. This impressive growth continued, with the company's annualized run-rate revenue (ARR) increasing by 684% in Q1 to $249 million. Nebius management aims to achieve an ARR of $750 million to $1 billion by the end of 2025 as it expands its cloud capacity.
One of the key factors contributing to Nebius' success is its strategic partnership with Nvidia. In December 2024, Nvidia participated in a strategic financing worth $700 million to accelerate the rollout of Nebius' full-stack infrastructure. This investment has enabled Nebius to grow from one data center location to five in just three quarters and is actively exploring new sites in the U.S. and around the world.
Nebius offers a full-stack AI infrastructure that allows developers to rent powerful GPUs from companies like Nvidia on an hourly basis. The company's customers can scale from a single GPU to large clusters based on their requirements. Nebius offers top Nvidia GPUs such as the H100 and the H200, and plans to be among the first to gain access to NVIDIA's next-generation Blackwell platform.
The cloud AI infrastructure market has a potential opportunity of $400 billion, and Nebius looks like an ideal pick for growth-oriented investors. In fact, Goldman Sachs rates Nebius as a buy and has a 12-month price target of $68 on the stock. The investment bank expects Nebius' AI stock to continue flying higher due to its remarkable growth.
Recently, Nebius stock popped 17% in a single session following Goldman's coverage. This suggests roughly 30% gains from current levels for Nebius stock. However, it's worth noting that Nebius stock is trading at a rich 68 times sales currently. While this may seem high, the forward sales multiple is way lower than the trailing one, indicating potential for further growth.
In conclusion, Nebius is a company to watch in the AI cloud infrastructure market. Its strategic partnership with Nvidia, impressive growth, and potential market opportunity make it an attractive investment for those seeking growth-oriented stocks. As always, it's important for investors to do their own research and consider their own risk tolerance when making investment decisions.
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