Is Nebius Group Stock a Buy?

Core Viewpoint - Nebius Group, formerly known as Yandex, has transformed into a cloud-based AI infrastructure provider after divesting its core search engine and Russian assets, and it resumed trading on Nasdaq in October 2024 [2][3] Company Overview - Nebius owns one data center in Finland and leases additional data centers in Missouri, France, Iceland, and is constructing another in New Jersey while securing a colocation deal in the U.K. [4] - The company utilizes Nvidia's H100, H200, and L40S GPUs for AI tasks and offers its AI infrastructure as a cloud-based service, integrating managed services and developer tools [5] Competitive Landscape - Nebius positions itself as a "full stack" AI infrastructure company, contrasting with CoreWeave, which focuses primarily on GPU-intensive workloads [6] - Nvidia holds a 0.5% stake in Nebius, indicating potential growth in cloud-based GPUs as the AI market expands [7] Strategic Partnerships - In September, Nebius signed a five-year $17.4 billion AI infrastructure deal with Microsoft, which is a significant revenue source for both Nebius and CoreWeave [8] Growth Metrics - Nebius' revenue surged 462% to $117.5 million in 2024, with a projected CAGR of 231% from 2024 to 2027, reaching $4.25 billion [9] - Adjusted EBITDA is expected to turn positive in 2026, with a forecasted increase of 186% to $852 million by 2027, driven by partnerships and data center capacity expansion [10] Valuation Analysis - Nebius has an enterprise value of $25.02 billion, trading at approximately 6 times its projected sales for 2027, while CoreWeave is valued at $83.19 billion, trading at less than 5 times its expected sales [11][12] Investment Outlook - Despite potential cash burn and increased debt, Nebius is positioned to benefit from the shift towards cloud-based AI processing, suggesting that its stock remains a viable investment opportunity [13]