TipRanks
4 min read
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When I first invested in Nebius Group (NBIS) earlier this year, I approached it with cautious optimism—hyper-growth stocks carry inherent risk. Today, with the stock up over 50%, I remain confident and recently raised my 12-month price target to $60, implying further upside of over 50%.
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While its EV/Sales multiple above 50x may appear steep, it’s less relevant for a vertically integrated AI infrastructure leader positioned to capitalize on current momentum. In my view, Nebius remains one of the most compelling growth stories in tech today.
Nebius’s recent growth is off the charts. Nebius posted exceptional growth in Q1 FY2025, reporting $55.3 million in revenue—a 385% year-over-year increase—driven by surging global demand for AI and generative computing solutions. Management projects annual recurring revenue (ARR) between $750 million and $1 billion by year-end, underscoring the company’s ambitious trajectory.
What sets Nebius apart is its diversified, vertically integrated approach. Beyond its core AI cloud services, the company operates in several high-growth areas: Avride, an autonomous mobility venture; Toloka, a data-labeling and AI development platform backed by Jeff Bezos’s venture arm; and TripleTen, an edtech startup focused on tech career reskilling. This strategic breadth positions Nebius to tap into multiple revenue streams within the expanding AI ecosystem.
While some still associate the company with its Yandex origins, Nebius has taken definitive steps to establish its independence, restructuring in 2022, relocating its headquarters to Amsterdam, and relisting on Nasdaq. Its $700 million funding round in December, led by investors including NVIDIA and Accel, affirms growing confidence in Nebius as a credible and emerging leader in global AI infrastructure.
While Nebius continues to invest aggressively, it is beginning to demonstrate operating leverage. In the same quarter that delivered standout revenue growth, the company reduced its adjusted EBITDA loss from $70.9 million a year ago to $62.6 million—an encouraging sign of improving cost efficiency.
A year ago, operating expenses stood at an unsustainable 827% of revenue; that figure has since declined to 334%. Though still high, the downward trend points toward greater operational discipline. Nebius’s cloud-based model is inherently scalable, allowing margins to expand as revenue grows and fixed costs are spread across a larger customer base.
