The Nebius Stock Rally Is Just Getting Started

Core Insights - Nebius is experiencing significant growth, with annual recurring revenue (ARR) projected to increase from $90 million in 2024 to $1.25 billion by the end of 2025, and potentially reaching $9 billion by the end of 2026 [1] - The company secured a substantial 5-year deal with Microsoft valued between $17.4 billion and $19.4 billion for AI data center services, indicating strong revenue growth potential [1] Company Growth - Nebius achieved over 14x growth in ARR from 2024 to 2025 and anticipates up to 7x growth in 2026 [1] - The company aims for $20 billion in ARR by 2028, assuming growth rates of 2x to 3x in 2027 [1] Strategic Partnerships - Nebius has established key partnerships with major tech companies, including a significant deal with Microsoft and an undisclosed agreement with Meta Platforms [1] - The Microsoft deal alone is expected to generate more than $3 billion in annual recurring revenue for 300 megawatts of power [1] Software and Technology - Nebius differentiates itself from competitors through its proprietary software stack, which enhances its ability to secure high-end deals and manage AI workloads effectively [1] - The company also has stakes in other technology ventures, including a commercial robotaxi service and an online coding bootcamp, diversifying its revenue streams [1] Financial Position - As of Q4, Nebius reported $3.7 billion in cash, marking its first quarter of positive operating cash flow, which enhances its liquidity for future growth [1] - The company plans to utilize corporate debt and asset-backed financing to support its expansion efforts [1]