Could This Monster Nvidia-Backed Artificial Intelligence (AI) Data Center Stock Be the Best Bargain in the Market Right Now?

Core Insights - Nvidia has seen a significant increase in its market capitalization, reaching $4.2 trillion, largely due to its dominance in the AI landscape since the launch of ChatGPT [1][2] - CoreWeave is a prominent player in the Nvidia-backed data center stocks, but Nebius is emerging as a noteworthy competitor [1][3] Nvidia's Strategic Relationships - Nvidia has established strategic partnerships that have contributed to its growth, including investments in companies like CoreWeave and Nebius [2][3] - Nebius, which recently went public after a spin-off from Yandex, raised $700 million in a private placement with Nvidia's participation [6] Nebius Overview - Nebius operates as a neocloud, providing access to Nvidia's GPUs through a cloud-based infrastructure services platform [7] - The company competes with CoreWeave and Oracle in the infrastructure-as-a-service market, indicating a growing demand for such services [7] Market Trends and Investment Potential - Major cloud hyperscalers like Microsoft, Alphabet, and Amazon are projected to spend approximately $260 billion on capital expenditures in 2023, with a significant portion directed towards AI data centers [8] - Meta Platforms' investment of $14.3 billion into Scale AI and its hiring initiatives highlight the increasing need for high-performance computing power in AI development [9] Financial Performance and Projections - Nebius reported an annual recurring revenue (ARR) run rate of $249 million, reflecting a 684% year-over-year growth, with management forecasting an ARR run rate between $750 million and $1 billion by year-end [11] - Analysts have set price targets for Nebius, with Goldman Sachs at $68 (28% upside) and Arete Research at $84 (nearly 60% discount) [12] Valuation and Market Position - Despite a 139% increase in Nebius' share price, the company is viewed as a potential bargain compared to peers like CoreWeave and Oracle [14][16] - Nebius is positioned to capitalize on the rising infrastructure spending and is seen as a disruptive force in the cloud infrastructure and AI data center markets [16]