Nebius Group N.V.

Nebius Group N.V. (NBIS) is a technology company focused on artificial intelligence (AI) infrastructure, headquartered in Amsterdam, Netherlands, and listed on Nasdaq. Its stock price surged in 2025 primarily due to the soaring global demand for AI computing power and the company's significant progress and contracts in this high-growth market.

Core Business

Nebius builds and operates a full-stack AI infrastructure, including large-scale GPU clusters, cloud platforms, and tools and services for developers. Its services are designed to meet the massive computing power required to handle intensive AI workloads such as AI model training and inference.

Market Positioning

It is considered one of the leaders in the "new AI cloud" space, partnering with tech giants such as Microsoft and Meta to provide specially optimized hardware (including NVIDIA GPUs) and software solutions. NVIDIA is one of the company's strategic investors, providing it with priority access to the latest GPUs.

Historical Background

Nebius was formerly the Russian internet giant Yandex N.V., which spun off its Russian assets in August 2024 and changed its name to Nebius Group N.V., relisting on Nasdaq. Therefore, its stock price history as an independent AI company is relatively short.

Nebius's stock price saw an astonishing increase of over 350% in 2025, primarily driven by several key factors:

Huge Market Demand

The explosive growth of generative AI and machine learning applications fueled unprecedented demand for AI data center capacity. Nebius's entire available capacity was sold out by the third quarter of 2025, highlighting the scarcity of its services.

Winning Multi-Billion Dollar Contracts

Microsoft: In September 2025, Nebius announced a long-term GPU cluster supply agreement with Microsoft's Azure AI platform worth $17.4 billion to $19.4 billion. This news directly led to a surge in its stock price.

Meta: Subsequently, in November, it announced a five-year infrastructure agreement with Meta Platforms worth $3 billion.

Strong Financial Growth

A large contract backlog drove explosive revenue growth. In the third quarter of 2025, the company's revenue increased by 355% year-over-year to $146 million, with its core AI cloud infrastructure business growing by 400%. Management expects annual recurring revenue (ARR) to reach $7 billion to $9 billion by the end of 2026. Aggressive Capacity Expansion: To meet demand, Nebius has invested heavily in data center construction. The company plans to invest $2 billion in capital expenditures by 2025, aiming to significantly increase its data center connectivity capacity from end-2024 levels.

Strategic Investor Confidence

The $700 million funding round led by Nvidia at the end of 2024, along with strategic investments from companies like Uber in its self-driving subsidiary Avride, has increased market confidence in Nebius's technological strength and future prospects.

In short, Nebius's soaring stock price is a direct result of gaining recognition from industry giants, achieving rapid growth, and aggressively expanding in the strategic emerging market of AI infrastructure.

Opinions differ regarding the sustainability of Nebius's stock performance and its future market capitalization, but a general consensus is that it possesses significant growth potential, accompanied by substantial risks.

Considerations for the sustainability of Nebius's stock performance:

- Strong AI market demand: The explosive growth of generative AI presents a huge market opportunity for Nebius's infrastructure services.

- Support from major clients: Billion-dollar long-term contracts with Microsoft and Meta secure revenue streams for many years to come, boosting investor confidence.

- Strategic investors: The involvement of strategic investors such as Nvidia ensures Nebius's advantage in acquiring scarce GPU resources.

- Cash flow outlook: Analysts expect Nebius's free cash flow to turn positive and grow rapidly in the coming years as investments gradually translate into returns.

- High-margin products: Its product tier provides the company with high-margin, sustainable revenue streams.

Considerations for the unsustainability of Nebius's stock performance:

- Execution risk: The company's ambitious capacity expansion plans are very aggressive, and there is an execution risk regarding whether they can be successfully completed in the short term.

- Financing Risks: Despite having large contracts and strategic investors, such massive capital expenditures still require continuous financing and may face volatility in the capital markets.

- Competition Risks: Although market demand is strong, Nebius still faces fierce competition from hyperscale cloud service providers such as Microsoft and Amazon, as well as peers like CoreWeave.

- Profitability: Despite rapid revenue growth, the company is currently operating at a loss and requires significant capital investment; achieving profitability on time is a key challenge.

- Overvaluation: In the short term, high market expectations may lead to overvaluation, putting downward pressure on the stock price.

Nebius Future Market Capitalization Forecast

The forecast for Nebius' future market capitalization is based on its ability to achieve its performance guidance. Analyst expectations are within a certain range:

- Recent Market Capitalization Growth: Based on analysts' conservative estimates of 2026 sales and a conservative price-to-sales ratio, its market capitalization could exceed $65 billion within the next 12 months.

- Medium-Term Market Capitalization Potential: If the company achieves analysts' expected revenue of $4.34 billion in 2027 and has a price-to-sales ratio of 9, its market capitalization could exceed $39 billion. If its growth exceeds expectations and it achieves a higher valuation, its market capitalization could be even higher.

- Long-term Market Capitalization Potential: If Nebius can maintain its growth momentum and achieve $21.7 billion in revenue by 2030, and its price-to-sales ratio falls back to a reasonable range of 7 to 10, its market capitalization could reach between $151.9 billion and $217 billion.

- Valuation Model Prediction: Based on discounted cash flow models, some analysts believe that Nebius's current intrinsic value is higher than its market price, giving it an intrinsic price valuation of $144.49, meaning it is currently undervalued.

Summary: Nebius's stock performance depends on its ability to continue to capitalize on the opportunities presented by the demand for AI infrastructure and effectively manage the execution and financing risks associated with its rapid expansion. Despite uncertainties, its future market capitalization has significant room for growth, thanks to existing major contracts and the support of strategic investors.