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Overlooked and Undervalued: 1 AI Stock Worth Considering
NBISNebius Group N.V.(NBIS) The Motley Fool·2025-03-06 16:13

Core Viewpoint - Nebius Group, an AI infrastructure company, is emerging as a significant player in the technology sector following its restructuring and separation from Yandex, presenting potential investment opportunities for investors [1][2][3]. Company Overview - Nebius Group was publicly listed under its current name since October 2022 after restructuring from Yandex, a major Russian search engine [3]. - The company is led by Arkady Volozh, who has shifted focus towards AI infrastructure while maintaining three other growing segments: Toloka, educational technology, and Avride, which specializes in autonomous delivery robots [4]. Growth Segments - Each segment of Nebius Group contributes to its revenue model, with Avride recently partnering with Grubhub for robot delivery services on U.S. college campuses, operating nearly 100 robots as of January [5]. - The company has expanded its operations by establishing a new GPU cluster in the U.S. and increasing capacity in Europe, alongside launching an AI-focused cloud software platform and AI Studio [6]. Financial Performance - Nebius Group anticipates revenue of at least 55millionforthecurrentquarter,indicatingover4555 million for the current quarter, indicating over 45% sequential growth from the previous quarter [8]. - The company projects an annualized run rate (ARR) of 750 million to 1billionbythefourthquarterofthisyear,withpotentialrevenueforthatquarterpossiblyexceeding1 billion by the fourth quarter of this year, with potential revenue for that quarter possibly exceeding 250 million [9]. Strategic Positioning - As of December 31, 2024, Nebius Group had a cash reserve of 2.45billionandnegligibledebt,positioningitstronglypostseparationfromYandex[10].ThecompanyhasastrategicrelationshipwithNvidia,whichparticipatedina2.45 billion and negligible debt, positioning it strongly post-separation from Yandex [10]. - The company has a strategic relationship with Nvidia, which participated in a 700 million funding round and holds over 1 million shares of Nebius stock [10]. Valuation Insights - The stock valuation has improved, with a forward enterprise-value-to-revenue multiple projected to be below 5 for the next year if revenue targets are met [11]. - Management's confidence in the company's growth potential suggests that the current valuation may be attractive, especially if investor interest increases [12].