Could This Be the Best Stock to Own for the Next Decade of AI Expansion?

Core Insights - Robust demand for AI data-center capacity is expected to drive significant growth for Nebius in the upcoming months [1] - Nebius Group presents a compelling investment opportunity due to its focus on AI-optimized computing capacity, contrasting with major hyperscalers [4][5] Company Overview - Nebius is building data center capacity specifically for AI training and inference workloads, utilizing Nvidia GPUs and an AI-optimized software stack [5] - The company rents its computing capacity to various clients, including AI start-ups and tech giants like Meta Platforms and Microsoft [6] Financial Performance - In Q3, Nebius reported a 355% year-over-year revenue increase to $146 million, with its core AI infrastructure business growing 400% [9] - The annualized revenue run rate for its core infrastructure business reached $551 million by the end of Q3 [10] - Adjusted margin for the core infrastructure business was 19%, reflecting strong profitability despite aggressive investments [11] Major Contracts - Nebius has secured a $17.4 billion, five-year deal with Microsoft, potentially expanding to $19.4 billion with additional service capacity [12] - A $3 billion deal with Meta Platforms is also in place, with plans to deploy necessary data center capacity by the end of 2025 [13] - These contracts could significantly impact Nebius' future share prices, given its market capitalization of nearly $22.3 billion [14] Capacity Expansion Plans - Nebius aims to increase its electrical power under contract to 2.5 gigawatts by the end of 2026, with a focus on expanding its data center footprint in the U.S. and internationally [15] - The company has raised its 2025 capital expenditure guidance from $2 billion to $5 billion, allocating significant resources to data center construction and GPU deployment [16][17] Software Development - Nebius has enhanced its AI-optimized software stack with the launch of Aether, providing security and administrative tools for enterprises [18] - The introduction of Nebius Token Factory aims to facilitate the deployment of open-source models at scale, improving customer retention [19] Growth Projections - Nebius projects an annual revenue run rate of $900 million to $1.1 billion by the end of 2025, and $7 billion to $9 billion by the end of 2026, indicating substantial growth potential [21]