After 70% Rally, Is Nebius Stock Still The Top AI Cloud Pick?

Core Viewpoint - Nebius, a Europe-based cloud services provider, has seen a 70% stock increase year-to-date, significantly outperforming the market, driven by a 385% year-over-year revenue increase in Q1 2025 due to strong demand for generative AI [2][3] Company Differentiation - Nebius is categorized as a "Neocloud," focusing on high-performance infrastructure specifically for AI workloads, unlike traditional hyperscalers [2] - The company has a close partnership with Nvidia, which provides prioritized access to high-demand GPUs, enhancing its competitive edge in a constrained supply market [3] - Nebius employs a vertically integrated model, designing its own servers to reduce costs and improve performance, allowing for rapid incorporation of the latest GPUs [4] - The company offers transparent billing without lock-in agreements, appealing to startups and AI-centric enterprises [4] Financial Performance and Outlook - Nebius's stock is currently priced at approximately $48 per share, trading at about 8.5 times the estimated FY'26 revenue, compared to CoreWeave's 7 times [5] - The company aims for an annualized revenue run rate between $750 million and $1 billion by the end of 2025, with a projected 160% sales increase in the upcoming year [5] - Nebius has a strong balance sheet with nearly $2.5 billion in cash and no debt, positioning it for continued expansion with reduced financial risk [6]