After a 70% surge, is Nebius' AI cloud stock still the leading choice?
In the dynamic world of cloud service providers, Nebius stands out as a pioneer, particularly in the realm of artificial intelligence (AI). The Europe-based company, listed on NASDAQ (NBIS), has been making waves with its innovative approach and impressive financial performance.
Since its inception, Nebius's High Quality portfolio has outperformed the S&P, achieving over 91% returns. This strong performance is expected to continue, as consensus estimates predict a 160% increase in Nebius's sales in the upcoming year.
One of the key factors setting Nebius apart is its full-stack AI infrastructure. Unlike competitors such as CoreWeave, Nebius controls both hardware and software, offering a vertically integrated ecosystem. This approach allows for fine-tuned performance for specific AI workloads, simplifying the development process and enhancing efficiency.
Nebius's proprietary technology and integration further set it apart. The company develops its data center server infrastructure in-house, providing high-performance computing capabilities tailored for AI applications. This approach enables streamlined operations and reduces dependency on external hardware providers.
Moreover, Nebius's AI Studio and other software tools simplify AI model development and management, adding to its competitive edge.
Nebius's partnership with Saturn Cloud offers cost-effective access to high-performance AI computing resources, enhancing scalability and cost savings for users. This collaboration allows users to leverage NVIDIA-accelerated clouds without long-term hardware investments.
Nebius's focus on reliability and cost efficiency is particularly appealing to organisations seeking flexible AI solutions without substantial resource commitments.
The company's financial position is strong, with nearly $2.5 billion in cash and no debt. Nebius anticipates achieving adjusted EBITDA positivity this year, further solidifying its financial stability.
Nebius's growth prospects appear promising compared to CoreWeave, which carries over $8.5 billion in debt. This significant debt could lead to significant interest expenses and affect profitability in the long run.
Nebius's close partnership with AI chip giant Nvidia (NASDAQ:NVDA) is another key factor in its success. Nvidia serves as a key collaborator and investor, providing Nebius with prioritized access to Nvidia's GPUs, such as the Blackwell super chips. This partnership may provide Nebius with a competitive edge in the AI cloud market.
Nebius specializes in high-performance infrastructure for AI workloads, categorized as a "Neocloud" provider. The company's growth trajectory is promising, with a year-to-date increase of 70% and a year-over-year revenue increase of 385% in the first quarter of 2025. Nebius aims for an annualized revenue run rate between $750 million and $1 billion by the end of 2025.
In conclusion, Nebius's innovative approach, financial stability, and promising growth prospects make it a standout player in the cloud service provider market. Its focus on AI solutions, coupled with its partnership with Nvidia, positions it well for future success.
In light of its innovative full-stack AI infrastructure and proprietary technologies, Nebius isexpected to significantly increase its revenue, particularly in the technology sector like artificial-intelligence, reflecting the 160% sales growth projected for the upcoming year. With a strong financial position and promising growth trajectory, Nebius stands to outperform competitors such as CoreWeave, which carries substantial debt, potentially impacting profitability in the long run.
