Where Will Nebius Be in 1 Year?

Company Overview - Nebius (NASDAQ: NBIS) has emerged as one of the most explosive stocks in 2023, evolving from the Russian tech company Yandex after it was delisted from Nasdaq due to geopolitical events [1] - The company has rebranded and is now based in Amsterdam, focusing on artificial intelligence (AI) cloud infrastructure, referred to as neocloud [1] Financial Performance - In Q2, Nebius reported a staggering revenue increase of 625%, reaching $105.1 million, and its stock price has surged by 424% this year, outperforming nearly all other AI stocks [2] - The company experienced a nearly 50% stock price increase in one session following a significant contract announcement with Microsoft for $17.4 billion in GPU services through 2031, indicating strong future revenue commitments despite current low revenue levels [3] Market Dynamics - The demand for AI cloud servers is driving rapid growth for Nebius and its smaller peer, CoreWeave, with the latter reporting a 207% revenue increase in Q2 to $1.21 billion [3][6] - Major cloud computing companies, known as hyperscalers, are projected to spend around $300 billion on capital expenditures, primarily for data centers to support AI computing power [5] Business Model and Risks - Nebius, like other neocloud companies, requires significant capital expenditures to build data centers and acquire GPUs, leading to a reliance on debt financing [7] - As of the end of Q2, Nebius had $1 billion in debt against $1.7 billion in cash, and it reported an operating loss of $111.2 million, indicating challenges in profitability [8] - In comparison, CoreWeave has $11 billion in debt and is expected to incur over $1 billion in interest expenses this year, although Nebius may be on a more favorable trajectory [9]